Capital Flows to Brazil: The Endogeneity of Capital Controls

September 1, 1997

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Format: Chicago

Eliane A. Cardoso, and Ilan Goldfajn. Capital Flows to Brazil: The Endogeneity of Capital Controls, (USA: International Monetary Fund, 1997) accessed September 18, 2024

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 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 of distress. The paper estimates a vector autoregression with capital flows, controls, and interest differentials. It shows that controls have been temporarily effective in altering levels and composition of capital flows but have had no sustained effects in the long run.

Subject: Balance of payments, Capital controls, Capital flows, Capital inflows, Capital outflows, Private capital flows

Keywords: Brazil's capital control, Capital, Capital control data, Capital Controls, Capital flow, Capital Flows, Capital inflows, Capital outflows, Capital transfer, Changes in capital control, Control, Control measure, Controls to flow, Determinants of capital flow, Eastern Europe, Effect of capital control, Exchange rate, Foreign currency, Importance of capital control, Private capital flows, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/115
Stock No:

WPIEA1151997
ISBN:

9781451942989
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 45, No. 1, March 1998.

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