 Estimated policy rules for capital controlsJournal of International Money and Finance, 2022, vol. 122, issue C Abstract: Are capital controls macroprudential or mercantilist? I explore this question using a novel, weekly dataset on policy actions in 21 emerging-market economies (EMEs) from 2001 to 2015, and a new proxy for mercantilist motivations: the weighted appreciation of a country’s currency against those of its trade competitors. Capital controls arebothmercantilist and macroprudential. Moreover, the choice of instruments is systematic: policymakers use two instruments—inflow tightening and outflow easing—to respond to mercantilist concerns, while using only inflow tightening in response to macroprudential concerns. Inflow tightening is countercyclical to bank credit to GDP gap but acyclical to the specific macroprudential concerns related to external or foreign currency borrowing. However,high level of some types of foreign debt reduces countercyclicality to mercantilist concerns. Higher exchange rate pass-through to export prices, and inflation targeting regime with managed exchange rates, increase countercyclicality to mercantilist concerns. Keywords: Capital controls; Macroprudential policy; Mercantilist motivations; Capital flows; Emerging markets; Policy rules (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:jimfin:v:122:y:2022:i:c:s0261560621002448 DOI: 10.1016/j.jimonfin.2021.102593 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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