IMF Policy Discussion Papers

International Capital Transactions: Should They Be Restricted?

Author/Editor:

Norman S. Fieleke

Publication Date:

December 1, 1993

Summary:

Some prominent economists and officials contend that government restrictions should be used to limit international capital movements that are considered destabilizing. This paper briefly summarizes the recent usage of such restrictions, discusses their international acceptance and their theoretical justification, reviews recent empirical studies of their efficacy, and examines their efficacy in Ireland, Spain, and Portugal during the latter part of 1992. The conclusion is that such restrictions typically have no more than fleeting and minor success in attaining their objectives.

Series:

Policy Discussion Paper No. 1993/020

Subject:

Balance of payments Capital controls Capital flows Currencies Exchange rates Financial services Foreign exchange Interbank rates Money