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Capital controls in Brazil: effective?

Author

Listed:
  • Marcos Chamon

    (IMF)

  • Marcio Garcia

    (Department of Economics PUC-Rio)

Abstract

We analyze the impact of the controls and restrictions on capital inflows that Brazil has adopted since late 2009. We document that these measures had some success in segmenting the Brazilian and global financial markets, as measured by wedges between onshore and offshore prices of similar fixed and variable income assets. However, that failed to translate into significant changes in the exchange rate, at least in the immediate aftermath of these measures, suggesting limited success in mitigating real appreciation. But capital controls/restrictions may have contributed to the sizable depreciation of the real in 2012, possibly amplifying the effect on the exchange rate of cuts in the interest policy rate during that period.

Suggested Citation

  • Marcos Chamon & Marcio Garcia, 2013. "Capital controls in Brazil: effective?," Textos para discussão 606, Department of Economics PUC-Rio (Brazil).
  • Handle: RePEc:rio:texdis:606
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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