EconPapers    
Economics at your fingertips  
 

Fine-Tuning an Open Capital Account in a Developing Country: The Indonesian Experience

Sisira Jayasuriya and Shawn Leu ()

Asian Development Review, 2012, vol. 29, issue 2, 136-180

Abstract: Indonesia has operated a liberal capital account permitting relatively free flow of international non-FDI flows since the early 1970s. In this paper, we review the Indonesian experience and the effectiveness of capital restrictions during 1990–2010 using a SVAR model of the Indonesian economy. Because of severe data problems in the pre-1997 period and because the Indonesian monetary policy and broader macroeconomic regime underwent fundamental changes since the 1997 crisis, we also estimated a model separately for the 2000–2010 period. Both sets of results suggest that inflow and outflow restrictions have been effective for FDI but largely ineffective for portfolio capital. However, the 2000–2010 model results indicate not only that restrictions on inflows have a short-term impact on restricting portfolio flows, but also suggest that controls on inward portfolio investments have some ability to shift funds from short-term to longer-term markets, though the impact is short-lived.

JEL-codes: F30 F41 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbadr:2748

Access Statistics for this article

Asian Development Review is currently edited by Shang-Jin Wei

More articles in Asian Development Review from Asian Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Maria Susan M. Torres ().

 
Page updated 2020-08-18
Handle: RePEc:ris:adbadr:2748