Capital Controls and Monetary Policy in Developing Countries

Juan Montecino () and Jose Cordero

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: This paper looks at both the theoretical and empirical literature on capital controls and finds that capital controls can play an important role in developing countries by helping to insulate them from some of the harmful effects of volatile and short-term capital flows. The authors look at controls on capitalinflows in Malaysia (1989-1995); Colombia (1993-1998); Chile (1989-1998); and Brazil (1992-1998), and also consider the case of Malaysia’s controls on outflows in 1998-2001. They conclude that there is sufficient backing in both economic theory and empirical evidence to consider more widespread adoption of capital controls in order to address some of the macroeconomic problems associated with short-term capital flows, to enable certain development strategies, and to allow policy makers more flexibility with regard to crucial monetary and exchange rate policies.

Keywords: capital controls; capital flows (search for similar items in EconPapers)
JEL-codes: F F2 F20 F21 F3 F32 O O1 O16 O2 O23 O24 O5 O55 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-04
New Economics Papers: this item is included in nep-dev, nep-ifn, nep-mon and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2010-10

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