Capital Controls and International Trade Finance
This paper studies the effects of prohibiting individuals from holding foreign assets, and of allowing firms to trade in foreign assets only up to what is needed to finance export and import activities. Although firms can perform arbitrage between domestic and foreign financial markets, the distortions in asset markets are not fully arbitraged away but instead they are transmitted to domestic goods market. The paper discusses the effects of shocks in foreign financial markets and in domestic fiscal policy. We show that the dynamics and steady states are crucially affected by capital controls.
|Date of creation:||Sep 1989|
|Date of revision:|
|Publication status:||published as Journal of International Economics, Volume 33, No.3/4, pp. 285-304 November 1992|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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.:
- Giovannini, Alberto, 1988. "The real exchange rate, the capital stock, and fiscal policy," European Economic Review, Elsevier, vol. 32(9), pages 1747-1767, November.
- Edwards, Sebastian & Ostry, Jonathan D, 1992.
"Terms of Trade Disturbances, Real Exchange Rates, and Welfare: The Role of Capital Controls and Labor Market Distortions,"
Oxford Economic Papers,
Oxford University Press, vol. 44(1), pages 20-34, January.
- Sebastian Edwards & Jonathan D. Ostry, 1989. "Terms of Trade Disturbances, Real Exchange Rates and Welfare: The Role of Capital Controls and Labor Market Distortions," NBER Working Papers 2907, National Bureau of Economic Research, Inc.
- Stockman, Alan C & Hernandez D, Alejandro, 1988.
"Exchange Controls, Capital Controls, and International Financial Markets,"
American Economic Review,
American Economic Association, vol. 78(3), pages 362-74, June.
- Alan C. Stockman & Alejandro Hernandez D., 1985. "Exchange Controls, Capital Controls, and International Financial Markets," NBER Working Papers 1755, National Bureau of Economic Research, Inc.
- Joseph E. Gagnon, 1988.
"Adjustment costs and international trade dynamics,"
International Finance Discussion Papers
321, Board of Governors of the Federal Reserve System (U.S.).
- Olivier J. Blanchard, 1984.
"Debt, Deficits and Finite Horizons,"
NBER Working Papers
1389, National Bureau of Economic Research, Inc.
- Rudiger Dornbusch, 1985.
"Special Exchange Rates for Capital Account Transactions,"
NBER Working Papers
1659, National Bureau of Economic Research, Inc.
- Dornbusch, Rudiger, 1986. "Special Exchange Rates for Capital Account Transactions," World Bank Economic Review, World Bank Group, vol. 1(1), pages 3-33, September.
- Obstfeld, Maurice, 1986.
"Capital controls, the dual exchange rate, and devaluation,"
Journal of International Economics,
Elsevier, vol. 20(1-2), pages 1-20, February.
- Maurice Obstfeld, 1984. "Capital Controls, The Dual Exchange Rate, and Devaluation," NBER Working Papers 1324, National Bureau of Economic Research, Inc.
- Jeremy Greenwood & Kent P. Kimbrough, 1985. "Capital Controls and Fiscal Policy in the World Economy," Canadian Journal of Economics, Canadian Economics Association, vol. 18(4), pages 743-65, November.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:3112. 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: ()
If references are entirely missing, you can add them using this form.