Effectiveness of Capital Controls in Selected Emerging Markets in the 2000's
December 1, 2011
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Summary
This paper estimates the effectiveness of capital controls in response to inflow surges in Brazil, Colombia, Korea, and Thailand in the 2000s. Controls are generally associated with a decrease in inflows and a lengthening of maturities, but the relationship is not statistically significant in all cases, and the effects are temporary. Controls are more successful in providing room for monetary policy than dampening currency appreciation pressures. We argue that the macroeconomic impact of capital controls depends on the extensiveness of the policy, the level of capital market development, the support provided by other policies, and the persistence of capital flows.
Subject: Balance of payments, Business cycles, Capital controls, Capital flows, Capital inflows, Current account balance, Economic growth
Keywords: Business cycles, capital, capital control, capital controls, Capital flows, Capital inflows, control index, currency appreciation, Current account balance, emerging market economies, Global, inflow control, interest rate differential, outflow control index, outflow control liberalization, outflow liberalization, policy in Brazil, private capital flows, The URR, WP
Pages:
45
Volume:
2011
DOI:
Issue:
281
Series:
Working Paper No. 2011/281
Stock No:
WPIEA2011281
ISBN:
9781463926625
ISSN:
1018-5941
