Capital Controls and the Timing of Exchange Regime Collapse

Daekuen Park and Jeffrey Sachs

No 2250, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates the nature of balance of payments crises in regimes with capital controls. It extends earlier work on capital controls by assuming that households manage their consumption and asset portfolios to maximize intertemporal utility. Our main result is that capital controls are effective in delaying, but not preventing, a breakdown of a fixed exchange rate regime in the presence of money-financed fiscal deficits.

Date: 1987-05
Note: ITI IFM
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Citations: View citations in EconPapers (7)

Published as Daekeun Park & Jeffrey D. Sachs, 1996. "The Timing Of Exchange Regime Collapse Under Capital Controls," International Economic Journal, Korean International Economic Association, vol. 10(4), pages 123-141, December.

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