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Controls on capital inflows and external shocks

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  • David, Antonio C.

Abstract

The author attempts to analyze whether price-based controls on capital inflows are successful in insulating economies against external shocks. He presents results from vector auto regressive (VAR) models that indicate that Chile and Colombia, countries that adopted controls on capital inflows, seem to have been relatively well insulated against external disturbances. Subsequently, he uses the auto regressive distributed lag (ARDL) approach to co-integrationto isolate the effects of the capital controls on the pass-through of external disturbances to domestic interest rates in those economies. The author concludes that there is evidence that the capital controls allowed for greater policy autonomy.

Suggested Citation

  • David, Antonio C., 2007. "Controls on capital inflows and external shocks," Policy Research Working Paper Series 4176, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4176
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    References listed on IDEAS

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    9. Ffrench-Davis, Ricardo & Tapia, Heriberto, 2001. "Three varieties of capital surge management in Chile," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1702, December.
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    13. Francisco Gallego & Leonardo Hernández & Klaus Schmidt-Hebbel, 2002. "Capital Controls in Chile: Were They Effective?," Central Banking, Analysis, and Economic Policies Book Series,in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 12, pages 361-412 Central Bank of Chile.
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    16. David, Antonio C., 2007. "Revisiting Price-based Controls on Capital Inflows in a "Sophisticated" Emerging Market," World Development, Elsevier, vol. 35(8), pages 1329-1340, August.
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    Cited by:

    1. Moritz Cruz & Bernard Walters, 2008. "Is the accumulation of international reserves good for development?," Cambridge Journal of Economics, Oxford University Press, vol. 32(5), pages 665-681, September.
    2. David, Antonio C., 2007. "Revisiting Price-based Controls on Capital Inflows in a "Sophisticated" Emerging Market," World Development, Elsevier, vol. 35(8), pages 1329-1340, August.

    More about this item

    Keywords

    Macroeconomic Management; Economic Theory&Research; Economic Stabilization; Capital Flows; Financial Economics;

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