Terms of Trade Disturbances, Real Exchange Rates, and Welfare: The Role of Capital Controls and Labor Market Distortions
Many arguments in favor of maintaining capital controls within the European Community have not paid sufficient attention to the welfare consequences of this type of intervention. The authors' paper provides a simple choice-theoretic framework in which the welfare effects of capital controls can be assessed. First, they compare the welfare effects of terms of trade shocks in economies with and without capital controls. Second, the authors inquire into the nature of second best arguments for maintaining capital controls, given that other distortions (notably in the labor market) will remain after the European single market is in place in 1992. Copyright 1992 by Royal Economic Society.
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Volume (Year): 44 (1992)
Issue (Month): 1 (January)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sebastian Edwards, 1987.
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- Dornbusch, Rudiger, 1983.
"Real Interest Rates, Home Goods, and Optimal External Borrowing,"
Journal of Political Economy,
University of Chicago Press, vol. 91(1), pages 141-53, February.
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"On the Complementarity of Commercial Policy, Capital Controls and Inflation Tax,"
NBER Working Papers
1583, National Bureau of Economic Research, Inc.
- Joshua Aizenman, 1986. "On the Complementarity of Commercial Policy, Capital Controls, and Inflation Tax," Canadian Journal of Economics, Canadian Economics Association, vol. 19(1), pages 114-33, February.
- Adams, Charles & Greenwood, Jeremy, 1985. "Dual exchange rate systems and capital controls: An investigation," Journal of International Economics, Elsevier, vol. 18(1-2), pages 43-63, February.
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