 Sticky capital controlsMiguel Acosta-Henao, Laura Alfaro and Andrés Fernández Journal of International Economics, 2025, vol. 157, issue C Abstract: With a new quarterly dataset on the intensive margin of priced-based capital controls, complemented with extensive measures (restrictions, prohibitions, and authorizations) constructed using text analysis, we document that capital controls are “sticky”. Changes to price-based controls do not occur frequently; and when they do, they display high autocorrelation. Extensive measures also show considerable persistence. We then augment a model of capital controls relying on pecuniary externalities with an (S,s) cost of implementing such policies, and illustrate how this friction goes a long way toward bringing the model closer to the data. When the extended model is calibrated to the countries in the new dataset, we find that the size of these costs is large, substantially reducing the welfare-enhancing effects of capital controls in the frictionless Ramsey benchmark without (S,s) costs. This calls for a richer set of policy constraints when modeling the optimal use of capital controls. Keywords: Capital controls; Macroprudential policies; Stickiness; Intensive Margin; (S, s) costs (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:157:y:2025:i:c:s0022199625000601 DOI: 10.1016/j.jinteco.2025.104104 Access Statistics for this article Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, Andrés More articles in Journal of International Economics from Elsevier |
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