Effectiveness of Capital Controls in Selected Emerging Markets in the 2000's
IMF Working Papers, December 1, 2011
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Bibliographic details
- Authors: Chikako Baba, Annamaria Kokenyne
- Published: December 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463926625.001
Overview and objective
- Paper estimates the effectiveness of capital controls in response to inflow surges in Brazil, Colombia, Korea, and Thailand in the 2000s.
- Authors: Chikako Baba, Annamaria Kokenyne.
- Date: December 1, 2011.
Main empirical findings
- Controls are generally associated with a decrease in inflows.
- Controls are generally associated with a lengthening of maturities.
- The relationship between controls and inflows/maturities is not statistically significant in all cases.
- The effects of controls are temporary.
- Controls are more successful in providing room for monetary policy than in dampening currency appreciation pressures.
Interpretation and conditional factors
- 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,
- the persistence of capital flows.
Policy implications and emphasis
- Capital controls can be a tool to create space for monetary policy during inflow surges.
- Capital controls are less reliable as a tool to prevent currency appreciation.
- Effectiveness is context-dependent; policymakers should consider market development, policy design breadth, complementary policies, and expected persistence of flows when deciding on controls.
Keywords and subjects covered
- Subjects: 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.
Effectiveness of Capital Controls in Selected Emerging Markets in the 2000's — Chikako Baba, Annamaria Kokenyne, December 1, 2011.