Effectiveness of Capital Controls: Gates versus Walls

Yang Zhou and Shigeto Kitano

No DP2022-38, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This study analyzes the effectiveness of capital controls on international debt flows using data of 81 economies, including both advanced and emerging economies, over the period from 1995 to 2019. The analysis using the total sample shows that, although they are in the expected directions, the impulse responses of capital controls are statistically insignificant. Making various distinctions among samples (such as advanced and emerging economies and pre- and post-crisis periods), we still find that most results are statistically insignificant. However, the canonical distinction between the "gate" and "wall" economies indicates that the effectiveness of capital controls is relevant for the "wall" emerging economies.

Keywords: Capital flows; Capital controls; Local projection (search for similar items in EconPapers)
JEL-codes: E69 F32 F38 F41 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2022-12, Revised 2023-04
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon and nep-opm
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