Recent Experiences with Capital Controls : Is There A Lesson for Turkey?
Capital flows in the 1990's and their sudden reversals and the resulting turmoil created in financial markets together with big financial losses, revived the interests in capital controls. There are inherent destabilizing factors in international financial system and Tobin had seen that as early as 1972 when he suggested levying a tax on financial transactions as a way of smoothing out destabilizing factors, even though in its original formulation it was not applied anywhere due to its impracticality. Various capital inflow and outflow control experiences and recent crisis indicated that controls, even though are only second best, can be resorted temporarily, provided that the time gained is productively used for making the necessary adjustments in the inconsistent policy mix that brought about the controls in the first place. In such a context, for countries with high domestic debt like Turkey, where, even the intervention itself can be a source of speculation, an exchange rate band, in which the limits of the band is defended through taxing the violators of the band rather than central bank intervention can be an alternative. Such a strategy would be beneficial if Turkey uses the time to address the structural issues, rather than relaxes under the protective cushion of the tax. This method is advantageous to the sterilized intervention presently used to decrease exchange rate volatility arising from speculative inflows, first because, it will keep the central bank reserves intact, second it will force the violators of the exchange rate band to share the responsibility of their violation. If temporary controls are very carefully coordinated with the appropriate supporting policies, they could replace IMF programs with financial assistance, at least till the new and improved international financial system becomes operational.
Volume (Year): 5 (2005)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: Head Office, Istiklal Cad. 10 Ulus, 06100 Ankara|
Phone: (90 312) 507 5000
Fax: (90 312) 507 5640
Web page: http://www.tcmb.gov.tr/
More information through EDIRC
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.:
- Claessens, Stijn & Dooley, Michael P & Warner, Andrew, 1995.
"Portfolio Capital Flows: Hot or Cold?,"
World Bank Economic Review,
World Bank Group, vol. 9(1), pages 153-174, January.
- Classens, S. & Dooley, M.P. & Warner, A., 1995. "Portfolio Capital Flows: Hot or Cold," Papers 501, Harvard - Institute for International Development.
- 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 162-172, January.
- Barry Eichengreen, James Tobin, and Charles Wyplosz., 1994. "Two Cases for Sand in the Wheels of International Finance," Center for International and Development Economics Research (CIDER) Working Papers C94-045, University of California at Berkeley.
- Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1994. "Two Cases for Sand in the Wheels of International Finance," Center for International and Development Economics Research (CIDER) Working Papers 233396, University of California-Berkeley, Department of Economics.
- E.V.K. FitzGerald, 1999. "Policy Issues in Market Based and Non Market Based Measures To Control the Volatility of Portfolio Investment," Development Working Papers 129, Centro Studi Luca d'Agliano, University of Milano.
- Edison, Hali J. & Reinhart, Carmen M., 1999. "Capital controls during financial crises: the cases of Malaysia and Thailand," Proceedings, Federal Reserve Bank of San Francisco, issue Sep, pages 1-36.
- Hali J. Edison & Carmen M. Reinhart, 2000. "Capital controls during financial crises: the case of Malaysia and Thailand," International Finance Discussion Papers 662, Board of Governors of the Federal Reserve System (U.S.).
- Reinhart, Carmen & Edison, Hali, 2001. "Capital controls during financial crises: The case of Malaysia and Thailand," MPRA Paper 13903, University Library of Munich, Germany.
- Eliana Cardoso & Ilan Goldfajn, 1998. "Capital Flows to Brazil: The Endogeneity of Capital Controls," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 161-202, March.
- Eliane A. Cardoso & Ilan Goldfajn, 1997. "Capital Flows to Brazil; The Endogeneity of Capital Controls," IMF Working Papers 97/115, International Monetary Fund.
- Melike Altinkemer & Nazim Ekinci, 1992. "Capital Account Liberalization : The Case of Turkey," Discussion Papers 9210, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Reinhart, Carmen M. & Smith, R. Todd, 2002. "Temporary controls on capital inflows," Journal of International Economics, Elsevier, vol. 57(2), pages 327-351, August.
- Carmen M. Reinhart & R. Todd Smith, 2001. "Temporary Controls on Capital Inflows," NBER Working Papers 8422, National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Smith, R Todd, 2002. "Temporary controls on capital inflows," MPRA Paper 13863, University Library of Munich, Germany.
- Salgado, Maria José S. & Garcia, Márcio G. P. & Medeiros, Marcelo C., 2005. "Monetary Policy During Brazil´s Real Plan: Estimating the Central Bank´s Reaction Function," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 59(1), January.
- Maria José Salgado & Márcio Gomes Pinto Garcia & Marcelo C. Medeiros, 2001. "Monetary policy during Brazil´s Real Plan: estimating the Central Bank´s reaction function," Textos para discussão 444, Department of Economics PUC-Rio (Brazil).
- Kenneth Kasa, 1999. "Time for a Tobin tax?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue apr9.
- Angel Cabrera & Luis Felipe Lagos, 2000. "Monetary Policy in Chile: a black box?," Working Papers Central Bank of Chile 88, Central Bank of Chile.
- Akira Ariyoshi & Andrei Kirilenko & Inci Ötker & Bernard Laurens & Jorge Iván Canales Kriljenko & Karl Friedrich Habermeier, 2000. "Capital Controls; Country Experiences with Their Use and Liberalization," IMF Occasional Papers 190, International Monetary Fund.
- Sukru Binay & Ferhan Salman, 1998. "The Global Crisis and The Turkish Economy," Working Papers 9801, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Sebastian Edwards, 1996. "A Tale of Two Crises: Chile and Mexico," NBER Working Papers 5794, National Bureau of Economic Research, Inc.
- Jenny Corbett & David Vines, 1999. "Asian Currency and Financial Crises: Lessons from Vulnerability, Crisis and Collapse," The World Economy, Wiley Blackwell, vol. 22(2), pages 155-177, 03. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:tcb:cebare:v:5:y:2005:i:2:p:1-38. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()or () or ()
If references are entirely missing, you can add them using this form.