Article ID Journal Published Year Pages File Type
963783 Journal of International Money and Finance 2014 16 Pages PDF
Abstract

Governments have rarely imposed or removed capital controls in response to short-term fluctuations in output, the terms of trade, or financial-stability considerations. We show empirically that controls on the international flow of financial capital are highly durable, often remaining in place for decades; their duration is striking compared with related phenomena such as exchange rate regimes. This represents a challenge to any proposed use of capital controls as an instrument of macroeconomic and macro-prudential management, since we have little experience in using capital controls at high- or medium frequencies. Any new policy initiative mandating frequent shifts in controls will be based on theory rather than data-driven experience.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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