Reinhart, Carmen and Smith, R Todd (2002): Temporary controls on capital inflows. Published in: Journal of International Economics , Vol. 57, No. 2 (2002): pp. 327-351.
Download (135Kb) | Preview
During the past decade a number of countries imposed capital controls that had two distinguishing features: they were asymmetric, in that they were designed principally to discourage capital inflows, and they were temporary. This paper studies formally the consequences of these policies, calibrates their potential effectiveness, and assesses their welfare implications in an environment in which the level of capital inflows can be suboptimal. In addition, motivated by the fact that these types of controls have often been left in place after the dissipation of the shock that lead to the controls being implemented, the paper evaluates the welfare cost of procrastination in removing these types of controls.
|Item Type:||MPRA Paper|
|Original Title:||Temporary controls on capital inflows|
|Keywords:||capital flows controls international interest rates inflation reserve requirements|
|Subjects:||F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F40 - General
F - International Economics > F3 - International Finance > F32 - Current Account Adjustment; Short-Term Capital Movements
F - International Economics > F3 - International Finance > F31 - Foreign Exchange
|Depositing User:||Carmen Reinhart|
|Date Deposited:||08. Mar 2009 14:34|
|Last Modified:||13. Feb 2013 00:05|
Ariyoshi, Akira, Karl Habermeier, Bernard Laurens, Inci Otker-Robe, Jorge Ivan Canales-Kriljenko, and Andrei Kirilenko (2000) Capital Controls: Country Experiences with Their Use and Liberalization, IMF Occasional Paper 190, (Washington: International Monetary Fund).
Bartolini, Leonardo, and Allan Drazen, (1997) “Capital Account Liberalization as a Signal,” American Economic Review, 87, 138-54.
Calvo, Guillermo A. (1986) “Temporary Stabilization: Predetermined Exchange Rates,” Journal of Political Economy, 94, 1319-29.
Calvo, Guillermo A., Leiderman, Leonardo, and Carmen A. Reinhart (1993) “Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors,” IMF Staff Papers, 40, 108-51.
Calvo, Guillermo A. and Carlos A. Vegh (1993) Exchange-Rate Based Stabilization under Imperfect Credibility,” in Helmut Frisch and Andreas Worgotter (eds.) Open-Economy Macroeconomics, Chapter 1, pages 3-28 (London: The Macmillan Press).
Calvo, Guillermo A., Reinhart, Carmen M., and Carlos A. Vegh (1995) “Targeting the Real Exchange Rate: Theory and Evidence,” Journal of Development Economics, 47, 97-133.
Chang, Roberto and Andres Velasco (1999) “Liquidity Crises in Emerging Markets: Theory and Policy,” forthcoming 1999 NBER Macroeconomics Annual.
De Gregorio, Jose, Edwards, Sebastian, and Rodrigo O. Valdes (2000) “Controls on Capital Inflows: Do They Work?” mimeo., University of California Los Angeles.
Dooley, Michael P. (1996) “A Survey of Academic Literature on Controls Over International Capital Transactions,” IMF Staff Papers,43, 639-687.
Eichengreen, Barry and Andrew K. Rose (1998) “Staying Afloat when the Wind Shifts: External Factors and Emerging-Market Banking Crises,” Working Paper 6370, National Bureau of Economic Research.
Feldstein, Martin (1999) “Avoiding Currency Crises,” remarks presented at the Jackson Hole Federal Reserve Conference, August 28.
Frankel, Jeffrey A. and Andrew K. Rose (1996) “Currency Crashes in Emerging Markets: An Empirical Treatment,” Journal of International Economics, 41, 351-66.
Furman, Jason and Joseph E. Stiglitz (1998) “Economic Crises: Evidence and Insights from East Asia,” Brookings Papers on Economic Activity, Issue 2, 1-135.
Gros, Daniel (1987) “The Effectiveness of Capital Controls: Implications for Monetary Autonomy in the Presence of Incomplete Market Separation,” IMF Staff Papers, 34, 621-42.
Harberger, Arnold C. (1986) “Welfare Consequences of Capital Inflows,” in A.M. Choksi and D. Papageorgiou (eds.) Economic Liberalization in Developing Countries, 157-78 (Oxford: Basil Blackwell).
Krugman, Paul (1987) “The Narrow Moving Band, the Dutch Disease, and the Competitive Consequences of Mrs. Thatcher: Notes on Trade in the Presence of Scale Economies,” Journal of Development Economics, 27, 41-55.
Mathieson, Donald J., and Liliana Rojas-Suarez (1993) Liberalization of the Capital Account, Experiences and Issues, IMF Occasional Paper 103, (Washington: International Monetary Fund).
Montiel, Peter and Carmen M. Reinhart (1999) “Do Capital Controls and Macroeconomic Policies Influence the Volume and Composition of Capital Flows? Evidence from the 1990s,” mimeo.,University of Maryland.
Ostry, Jonathan, and Carmen M. Reinhart (1992) “Private Saving and Terms of Trade Shocks: Evidence from Developing Countries,” IMF Staff Papers 39, 495-517.
Rebelo, Sergio and Carlos A. Vegh (1995) “Real Effects of Exchange-Rate Based Stabilization: An Analysis of Competing Theories,” in B.S. Bernanke and J. Rotemberg (eds.) NBER Macroeconomics Annual 1995, 125-174 (Cambridge: MIT Press).
Reinhart, Carmen M., and R. Todd Smith (1998) “Too Much of a Good Thing: the Macroeconomic Effects of Taxing Capital Inflows,” Chapter 14 in R. Glick (ed.) Managing Capital Flows and Exchange Rates: Perspectives from the Pacific Basin, (Cambridge: Cambridge University Press).
Reinhart, Carmen M. and Carlos A. Végh (1995) Intertemporal Consumption Substitution and Inflation Stabilization: an Empirical Investigation,” University of Maryland Working Papers in International Economics No. 3.
Summers, Lawrence J. (1988) “Tax Policy and International Competitiveness,” in Jacob Frenkel (ed.) International Aspects of Fiscal Po licy (Chicago: University of Chicago Press).