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Efficient capital controls

  • Rodney Schmidt
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    Controls on short-term capital inflows or panic-driven capital outflows may benefit emerging markets that have fragile financial sectors and adjustable-peg currency regimes. However, the controls seen so far are relatively easy to evade, often complex and obscure, and supported by large corruptible bureaucracies. A tax on foreign-exchange payments avoids these drawbacks. It is transparent, inexpensive to set up and operate, administratively lean, and easy to adjust. A Tobin tax in effect, it is enforceable even when applied unilaterally.

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    Article provided by Emerald Group Publishing in its journal Journal of Economic Studies.

    Volume (Year): 28 (2001)
    Issue (Month): 3 (September)
    Pages: 199-212

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    Handle: RePEc:eme:jespps:v:28:y:2001:i:3:p:199-212
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    1. Richard K. Lyons., 1993. "Tests of Microstructural Hypotheses in the Foreign Exchange Market," Research Program in Finance Working Papers RPF-230, University of California at Berkeley.
    2. Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1995. "Two Cases for Sand in the Wheels of International Finance," Economic Journal, Royal Economic Society, vol. 105(428), pages 162-72, January.
    3. Barry J. Eichengreen, 1999. "Toward a New International Financial Architecture: A Practical Post-Asia Agenda," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 51.
    4. Kenneth Rogoff, 1999. "International Institutions for Reducing Global Financial Instability," NBER Working Papers 7265, National Bureau of Economic Research, Inc.
    5. Sebastian Edwards, 1999. "How Effective Are Capital Controls?," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 65-84, Fall.
    6. Dellas, H. & Stockman, A.C., 1988. "Self-Fullfilling Expectations, Speculative Attacks And Capital Controls," RCER Working Papers 138, University of Rochester - Center for Economic Research (RCER).
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