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Capital Flows to Brazil: The Endogeneity of Capital Controls By Eliana Cardoso and Ilan Goldfajn Full Text of This Article (PDF 2,328 K)
Abstract: This paper creates an index of capital controls to analyze the
determinants of capital flows to Brazil, accounting for the endogeneity of capital controls
by considering a government that sets controls in response to capital flows.
It finds that the government reacts strongly to capital flows by increasing controls on
inflows during booms and relaxing them in moments for distress. The paper estimates a vector
autoregression with capital flows, controls, and interest differentials. It shows that controls
have been tempoarily effective in altering levels an composition of capital flows but have had
no sustained effects in the long run. [JEL F32,F41] © 1998 International Monetary Fund |
