Can Short-Term Capital Controls Promote Capital Inflows

Tito Cordella

No 2011, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In an economy à la Diamond and Dybvig (1983), we present an example in which foreign lenders find it profitable to invest in an emerging market if, and only if, the emerging market government imposes taxes on short-term capital inflows. This implies that capital controls that are effective in reducing the vulnerability of emerging markets to financial crises may increase the volume of capital inflows.

Keywords: bank runs; Capital Controls; Capital Inflows; Herd Behaviour (search for similar items in EconPapers)
JEL-codes: F32 G14 G24 (search for similar items in EconPapers)
Date: 1998-11
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Can short-term capital controls promote capital inflows? (2003)
Working Paper: Can Short-Term Capital Controls Promote Capital Inflows? (1998)
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