Capital Flows to Brazil: The Endogeneity of Capital Controls

Eliane Cardoso and Ilan Goldfajn

No 1997/115, IMF Working Papers from International Monetary Fund

Abstract: This paper creates an index of capital controls to analyze the determinants of capital flows to Brazil, accounting for the endogeneity of capital controls by considering a government that sets controls in response to capital flows. It finds that the government reacts strongly to capital flows by increasing controls on inflows during booms and relaxing them in moments of distress. The paper estimates a vector autoregression with capital flows, controls, and interest differentials. It shows that controls have been temporarily effective in altering levels and composition of capital flows but have had no sustained effects in the long run.

Keywords: WP; capital flow; capital; control; Capital Flows; Capital Controls; exchange rate; foreign currency; controls to flow; capital transfer; capital control data; determinants of capital flow; effect of capital control; importance of capital control; Brazil's capital control; control measure; changes in capital control; Capital inflows; Capital outflows; Private capital flows; Eastern Europe (search for similar items in EconPapers)
Pages: 48
Date: 1997-09-01
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Citations: View citations in EconPapers (29)

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Related works:
Journal Article: Capital Flows to Brazil: The Endogeneity of Capital Controls (1998)
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