Why Do Countries Use Capital Controls?

ByNatalia T. Tamirisa, R. B. Johnston

December 1, 1998

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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

Recourse to controls on capital flows among developing economies is generally quite pervasive. This paper examines the structure and determinants of capital controls based on a cross-sectional study of developing and transition economies. It identifies categories of capital transactions that can be aggregated for analytical purposes. Controls are found to be related to the balance of payments, macroeconomic management, market and institutional evolution, prudential and other factors. The relationship with the balance of payments, however, is not robust to simultaneous equation analysis.

Subject: Capital controls, Capital flows, Capital markets, Foreign direct investment, Money markets

Keywords: capital market, control, market, WP

Pages:
37
Volume:
1998
DOI:
https://doi.org/10.5089/9781451859164.001
Issue:
181
Series:
Working Paper No. 1998/181
Stock No:
WPIEA1811998
ISBN:
9781451859164
ISSN:
1018-5941

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