IDEAS home Printed from https://ideas.repec.org/p/qsh/wpaper/133566.html
   My bibliography  Save this paper

Dilemma not Trilemma? Capital Controls and Exchange Rates with Volatile Capital Flows

Author

Listed:
  • Emmanuel Farhi
  • Ivan Werning

Abstract

We consider a standard New Keynesian model of a small open economy with nominal rigidities and study optimal capital controls. Consistent with the Mundellian view, we find that the exchange rate regime is key. However, in contrast with the Mundellian view, we find that capital controls are desirable even when the exchange rate is flexible. Optimal capital controls lean against the wind and help smooth out capital flows.

Suggested Citation

  • Emmanuel Farhi & Ivan Werning, "undated". "Dilemma not Trilemma? Capital Controls and Exchange Rates with Volatile Capital Flows," Working Paper 133566, Harvard University OpenScholar.
  • Handle: RePEc:qsh:wpaper:133566
    as

    Download full text from publisher

    File URL: http://scholar.harvard.edu/farhi/node/133566
    Download Restriction: no

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Les pays émergents peuvent-ils dompter le cycle financier mondial ?
      by ? in D'un champ l'autre on 2014-11-09 04:59:00

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qsh:wpaper:133566. 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: (Richard Brandon). General contact details of provider: http://edirc.repec.org/data/cbrssus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.