Effectiveness of Capital Controls in Selected Emerging Markets in the 2000's

Chikako Baba and Annamaria Kokenyne

No 2011/281, IMF Working Papers from International Monetary Fund

Abstract: This paper estimates the effectiveness of capital controls in response to inflow surges in Brazil, Colombia, Korea, and Thailand in the 2000s. Controls are generally associated with a decrease in inflows and a lengthening of maturities, but the relationship is not statistically significant in all cases, and the effects are temporary. Controls are more successful in providing room for monetary policy than dampening currency appreciation pressures. We argue that the macroeconomic impact of capital controls depends on the extensiveness of the policy, the level of capital market development, the support provided by other policies, and the persistence of capital flows.

Keywords: WP; capital control; control index; capital; The URR; capital controls; private capital flows; emerging market economies; interest rate differential; outflow liberalization; policy in Brazil; outflow control liberalization; currency appreciation; outflow control index; inflow control; Capital flows; Capital inflows; Business cycles; Current account balance; Global (search for similar items in EconPapers)
Pages: 45
Date: 2011-12-01
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Citations: View citations in EconPapers (68)

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