Exchange and Capital Controls as Barriers to Trade

Author/Editor:

Natalia T. Tamirisa

Publication Date:

June 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper considers the effect of exchange and capital controls on trade in the gravity-equation framework, in which bilateral exports depend on the distance between countries, the countries’ size and wealth, tariff barriers, and exchange and capital controls. The extent of exchange and capital controls is measured by unique indices. In view of the degree to which countries have liberalized their exchange systems, controls on current payments and transfers are found to be a minor impediment to trade, while capital controls significantly reduce exports into developing and transition economies. Thus, further capital account liberalization could significantly foster trade.

Series:

Working Paper No. 1998/081

Subject:

Balance of payments Capital controls Exchange restrictions Exports Foreign exchange International trade Tariffs Taxes Trade barriers

Notes:

Also published in Staff Papers, Vol. 46, No. 1, March 1999.

English

Publication Date:

June 1, 1998

ISBN/ISSN:

9781451955194/1018-5941

Stock No:

WPIEA0811998

Pages:

19

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