Is Optimal Capital-Control Policy Countercyclical In Open-Economy Models With Collateral Constraints?

Stephanie Schmitt-Grohe and Martín Uribe ()

No 22481, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper contributes to a literature that studies optimal capital control policy in open economy models with pecuniary externalities due to flow collateral constraints. It shows that the optimal policy calls for capital controls to be lowered during booms and to be increased during recessions. These findings are at odds with the conventional view that capital controls should be tightened during expansions to curb capital inflows and relaxed during contractions to discourage capital flight.

JEL-codes: E44 F41 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-mac, nep-mon and nep-opm
Note: EFG IFM
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Citations: View citations in EconPapers (4)

Published as Stephanie Schmitt-Grohé & Martín Uribe, 2017. "Is Optimal Capital Control Policy Countercyclical in Open Economy Models with Collateral Constraints?," IMF Economic Review, vol 65(3), pages 498-527.

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Related works:
Journal Article: Is Optimal Capital Control Policy Countercyclical in Open Economy Models with Collateral Constraints? (2017)
Working Paper: Is Optimal Capital-Control Policy Countercyclical In Open-Economy Models With Collateral Constraints? (2016)
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