Motivating Capital Controls: Evidence from New Measures of Capital Flow Restrictions

ByChikako Baba, Ricardo Cervantes, Salim M. Darbar, Annamaria Kokenyne, Viktoriya Zotova

January 30, 2026

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Countries implement and liberalize capital controls opportunistically. To show this point, this paper introduces two novel indices—the Financial Account Restrictiveness Index (FARI) and the AREAER Change Index (ACI)—to measure and track capital flow restrictions across 190 countries quarterly from 1999 to 2022. FARI quantifies the restrictiveness of capital accounts, while ACI captures policy changes over time. These indices offer a comprehensive, objective, and high-frequency toolset to analyze capital account policies and their evolution over the past two decades. Using the two indices, the paper highlights global liberalization trends, regional differences, and the cyclical use of capital controls in response to macroeconomic conditions and crises.60

Subject: Balance of payments, Capital account, Capital controls, Capital flows, Fiscal Analysis of Resource Industries (FARI), Foreign exchange, Revenue performance assessment

Keywords: AREAER Financial Account Restrictiveness Index, Capital account, capital account restriction, capital control, capital controls, capital flow, Capital flows, Caribbean, Central America, countercyclical, crisis management, Europe, Fiscal Analysis of Resource Industries (FARI), flow restriction, Global, IMF working paper, liberalization, restrictiveness, South America

Pages:
60
Volume:
2026
DOI:
https://doi.org/10.5089/9798229036832.001
Issue:
016
Series:
Working Paper No. 2026/016
Stock No:
WPIEA2026016
ISBN:
9798229036832
ISSN:
1018-5941

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