Motivations for capital controls and their effectiveness
Radhika Pandey (),
Gurnain Pasricha (),
Ila Patnaik () and
Ajay Shah ()
Working Papers from National Institute of Public Finance and Policy
We assess the motivations for changing capital controls and their effectiveness in India, a country where there is a comprehensive capital control system covering all crossborder transactions. We focus on foreign borrowing by firms, where systemic risk concerns could potentially play a role. A novel fine-grained data set of capital control actions is constructed. We find that capital control actions are potentially motivated by exchange rate considerations, but not by systemic risk issues. A quasi-experimental design reveals that the actions appear to have no impact either on the exchange rate or on variables connected with systemic risk.
Keywords: Capital controls; Capital flows; Exchange rate; Foreign borrowing (search for similar items in EconPapers)
JEL-codes: F38 G15 G18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-rmg
Note: Working Paper 168, 2016
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Working Paper: Motivations for Capital Controls and Their Effectiveness (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:npf:wpaper:16/168
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