Motivating Capital Controls: Evidence from New Measures of Capital Flow Restrictions

Chikako Baba, Ricardo Cervantes, Salim Darbar, Annamaria Kokenyne and Viktoriya Zotova

No 2026/016, IMF Working Papers from International Monetary Fund

Abstract: Countries implement and liberalize capital controls opportunistically. To show this point, this paper introduces two novel indices—the Financial Account Restrictiveness Index (FARI) and the AREAER Change Index (ACI)—to measure and track capital flow restrictions across 190 countries quarterly from 1999 to 2022. FARI quantifies the restrictiveness of capital accounts, while ACI captures policy changes over time. These indices offer a comprehensive, objective, and high-frequency toolset to analyze capital account policies and their evolution over the past two decades. Using the two indices, the paper highlights global liberalization trends, regional differences, and the cyclical use of capital controls in response to macroeconomic conditions and crises.60

Keywords: capital controls; restrictiveness; liberalization; crisis management; countercyclical; capital control; IMF working paper; flow restriction; capital flow; AREAER Financial Account Restrictiveness Index; capital account restriction; Capital account; Capital flows; Fiscal Analysis of Resource Industries (FARI); Caribbean; Global; Europe; South America; Central America (search for similar items in EconPapers)
Pages: 60
Date: 2026-01-30
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