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The effectiveness of capital controls and macroprudential measures

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  • Lee, Junyong
  • Lee, Kyounghun
  • Oh, Frederick Dongchuhl

Abstract

We review the literature on the effectiveness of capital controls and macroprudential measures. First, we explain the purposes and examples of capital controls and macroprudential policies. We then analyze various theoretical models and empirical findings from prior studies that investigate the effectiveness of each instrument. Moreover, we review several studies that directly compare the two instruments and discuss whether policymakers should implement capital controls or macroprudential measures to overcome financial crises. Finally, based on a discussion of the findings of previous studies, we suggest several possible avenues for future research.

Suggested Citation

  • Lee, Junyong & Lee, Kyounghun & Oh, Frederick Dongchuhl, 2023. "The effectiveness of capital controls and macroprudential measures," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 45(4), pages 1-22.
    • Handle: RePEc:zbw:kdijep:282013
    DOI: 10.23895/kdijep.2023.45.4.1
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    More about this item

    Keywords

    Capital Control; Macroprudential Measure; Financial Crisis;
    All these keywords.

    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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