Capital Controls and Firm Performance

Eugenia Andreasen (), Sofia Bauducco and Evangelina Dardati

ILADES-UAH Working Papers from Universidad Alberto Hurtado/School of Economics and Business

Abstract: This paper studies the effects of capital controls on firms’ production, investment and exporting decisions. We empirically characterize the firm’s responses to the introduction of a capital control, using the Chilean encaje implemented between 1991 and 1998 as a laboratory. Motivated by our findings, we build a general equilibrium model with heterogeneous firms, financial constraints and international trade and calibrate it to the Chilean economy. We find that capital controls reduce aggregate production and investment while increasing exports, the share of exporters and TFP. The e↵ects of capital controls are exacerbated for firms in more capital-intensive sectors and for exporters.

Keywords: Capital controls; firm dynamics; financial frictions; international trade. (search for similar items in EconPapers)
Pages: 46 pages
Date: 2019-06
New Economics Papers: this item is included in nep-dge and nep-int
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Capital controls and firm performance (2024)
Working Paper: Capital Controls and Firm Performance (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ila:ilades:inv331

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