Exchange and Capital Controls as Barriers to Trade

Natalia Tamirisa

No 1998/081, IMF Working Papers from International Monetary Fund

Abstract: This paper considers the effect of exchange and capital controls on trade in the gravity-equation framework, in which bilateral exports depend on the distance between countries, the countries’ size and wealth, tariff barriers, and exchange and capital controls. The extent of exchange and capital controls is measured by unique indices. In view of the degree to which countries have liberalized their exchange systems, controls on current payments and transfers are found to be a minor impediment to trade, while capital controls significantly reduce exports into developing and transition economies. Thus, further capital account liberalization could significantly foster trade.

Keywords: WP; control; trade; exchange; unmeasured trade distortion; exchange controls; capital controls; development; statistics yearbook; financing trade; enforcement of control; indices of control; capital controls as well as control; liberalization of control; pervasiveness of control; bilateral trade flow; effectiveness of control; effects of control; trade in factor; Exchange restrictions; Trade barriers; Exports; Tariffs; Global (search for similar items in EconPapers)
Pages: 19
Date: 1998-06-01
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Citations: View citations in EconPapers (20)

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