{
  "title": "Capital Controls and International Portfolio Theory: A Microeconomic Approach",
  "publication": "IMF Working Papers, June 1, 1990",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/capital-controls-and-international-portfolio-theory-a-microeconomic-approach-3057",
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  "summary": "This paper examines the effects of capital controls on asset prices. A closed-form valuation model by Eun and Janakirimanan (1986) is extended to analyze the impact of three restrictions on international portfolio investment: a percentage quantity constraint on the amount of foreign securities a dom",
  "sections": [
    {
      "heading": "Summary",
      "content": "- This paper examines the effects of capital controls on asset prices.\n- A closed-form valuation model by Eun and Janakirimanan (1986) is extended to analyze the impact of three restrictions on international portfolio investment:\n  - a percentage quantity constraint on the amount of foreign securities a domestic resident may hold in her portfolio;\n  - a constraint on the absolute amount of foreign securities a domestic resident may hold;\n  - a percentage tax on the domestic purchase price of a foreign security.\n- Comparative statics and numerical analysis are used to reveal the effects of these distortions on domestic and world equilibrium prices."
    },
    {
      "heading": "Methods and Model",
      "content": "- Extension of a closed-form valuation model (Eun and Janakirimanan, 1986).\n- Use of comparative statics.\n- Use of numerical analysis to determine impacts on equilibrium prices."
    },
    {
      "heading": "Key Findings",
      "content": "- The paper characterizes how three types of restrictions (percentage portfolio constraint, absolute quantity constraint, and percentage tax on purchase price) distort international portfolio investment decisions.\n- These distortions affect both domestic and world equilibrium prices (effects detailed through comparative statics and numerical examples in the paper)."
    },
    {
      "heading": "Subject Areas and Keywords",
      "content": "- Subjects: Asset prices, Balance of payments, Capital markets, External position, Financial institutions, Financial markets, Foreign assets, Foreign direct investment, Prices, Securities\n- Keywords: Asset prices, Capital markets, choice problem, Foreign assets, Foreign direct investment, foreign securities, information cost, percentage portfolio constraint, Securities, securities result, security demand, WP\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/capital-controls-and-international-portfolio-theory-a-microeconomic-approach-3057"
    }
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    "Authors: Marjorie B. Rose",
    "Published: June 1, 1990",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451970579.001",
    "This paper examines the effects of capital controls on asset prices.",
    "A closed-form valuation model by Eun and Janakirimanan (1986) is extended to analyze the impact of three restrictions on international portfolio investment:",
    "Comparative statics and numerical analysis are used to reveal the effects of these distortions on domestic and world equilibrium prices.",
    "Extension of a closed-form valuation model (Eun and Janakirimanan, 1986).",
    "Use of comparative statics.",
    "Use of numerical analysis to determine impacts on equilibrium prices.",
    "The paper characterizes how three types of restrictions (percentage portfolio constraint, absolute quantity constraint, and percentage tax on purchase price) distort international portfolio investment decisions.",
    "These distortions affect both domestic and world equilibrium prices (effects detailed through comparative statics and numerical examples in the paper).",
    "Subjects: Asset prices, Balance of payments, Capital markets, External position, Financial institutions, Financial markets, Foreign assets, Foreign direct investment, Prices, Securities",
    "Keywords: Asset prices, Capital markets, choice problem, Foreign assets, Foreign direct investment, foreign securities, information cost, percentage portfolio constraint, Securities, securities result, security demand, WP"
  ],
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