The Chilean-Style of Capital Controls: an Empirical Assessment

Heriberto Tapia and Ricardo Ffrench-Davis

No 255, Econometric Society 2004 Latin American Meetings from Econometric Society

Abstract: In this paper we review the main features of the Chilean-Style of capital controls during the nineties. In particular, we analyze empirically the effectiveness of the unremunerated reserve requirement (URR) in three key areas: its capacity to open space for monetary policy, its influence on the maturity profile of foreign liabilities, and its effect on the volume of capital flows. Our results suggest that the application of the URR was successful in those three fields, despite the existence of elusion and evasion in the application of the instrument. We conclude that the Chilean experience could be useful for other emerging countries facing capital surges and highlight some specific advantages and relevant shortcomings of the Chilean model.

Keywords: capital controls; capital flows; Chile; encaje; reserve requirement (search for similar items in EconPapers)
JEL-codes: F21 F30 F32 (search for similar items in EconPapers)
Date: 2004-08-11
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ecm:latm04:255

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