On the desirability of capital controls

Fabrizio Perri and Jonathan Heathcote

No 1349, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: In a standard two country international macro model we ask whether shutting down the market for international non-contingent borrowing and lending is ever desirable. The answer is yes. Imposing capital controls is unilaterally desirable when initial conditions are such that ruling out bond trade generates a sufficiently favorable change in the expected path for the terms of trade. Imposing capital controls can be welfare improving for both countries for calibrations in which changes in equilibrium terms of trade movements induced by the controls improve insurance against country specific shocks.

Date: 2015
New Economics Papers: this item is included in nep-dge, nep-mon and nep-opm
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Related works:
Journal Article: On the Desirability of Capital Controls (2016)
Working Paper: On the Desirability of Capital Controls (2016)
Working Paper: On the Desirability of Capital Controls (2016)
Working Paper: On the Desirability of Capital Controls (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:1349

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