Capital Controls, Collection Costs, and Domestic Public Debt

Joshua Aizenman and Pablo Guidotti

No 3443, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The implications of a large public debt for the implementation of capital controls for an economy where tax revenue collection is costly are examined. Conditions are analyzed under which policymakers will resort to capital controls to reduce the cost of recycling domestic public debt. The linkages between a costly tax collection mechanism, capital controls, am domestic government debt are explored in terms of a two-period m:x1el of optimal taxation. Numerical simulations are provided to illustrate haw capital controls are linked to different domestic public debt levels am to different degrees of efficiency in tax-revenue collection.

Date: 1990-09
Note: ITI IFM
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Citations: View citations in EconPapers (4)

Published as Journal of International Money and Finance, Vol. 13, no. 1, pp. 41-54, (February 1994).

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Journal Article: Capital controls, collection costs and domestic public debt (1994)
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