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Taming the tides of capital: Review of capital controls and macroprudential policy in emerging economies

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  • Norring, Anni

Abstract

This paper gives an overview on the use of macroprudential policy measures (MPMs) and capital flow management measures (CFMs) by emerging economies, and reviews literature on the effectiveness of these measures in containing the effects of large and volatile capital flows. The main findings of the paper are the following: First, major EMEs tend to use both MPMs and CFMs more than AEs. Second, the empirical evidence on the effectiveness of CFMs remains mixed. Third, there is indicative evidence that MPMs can contain the effects of capital flow volatility. Lastly, there is still little research into the interaction of CFMs and MPMs.

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  • Norring, Anni, 2022. "Taming the tides of capital: Review of capital controls and macroprudential policy in emerging economies," BoF Economics Review 1/2022, Bank of Finland.
  • Handle: RePEc:zbw:bofecr:12022
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    1. 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.

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    More about this item

    Keywords

    capital flows; emerging economies; CFMs; MPMs;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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