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One Cost Of The Chilean Capital Controls
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Book Synopsis One Cost of the Chilean Capital Controls by : Kristin J. Forbes
Download or read book One Cost of the Chilean Capital Controls written by Kristin J. Forbes and published by . This book was released on 2010 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is growing support for taxes on short-term capital inflows in emerging markets, such as the encaje adopted by Chile from 1991-98. Previous empirical assessments of the encaje conclude that it may have generated some small economic benefits, such as shifting the composition of capital inflows to a longer maturity, but no significant economic costs. Managers of small and medium-sized companies in Chile, however, claim that the encaje made it substantially more difficult to obtain financing for productive investment. This paper assesses whether the Chilean capital controls increased financial constraints for different-sized, publicly-traded firms. It uses two different testing methodologies: a Tobin's q and Euler-equation framework. Results indicate that during the encaje, smaller traded firms in Chile experienced significant financial constraints and these constraints decreased as firm size increased. Both before and after the encaje, however, no group of traded firms experienced significant financial constraints, and there is no relationship between firm size and financial constraints. Although Chilean-style capital controls may also yield benefits encaje could be particularly important in emerging markets where smaller firms can be valuable sources of job creation and economic growth.
Book Synopsis One Cost of the Chilean Capital Controls by : Kristin Forbes
Download or read book One Cost of the Chilean Capital Controls written by Kristin Forbes and published by . This book was released on 2003 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is growing support for taxes on short-term capital inflows in emerging markets, such as the encaje adopted by Chile from 1991-98. Previous empirical assessments of the encaje conclude that it may have generated some small economic benefits, such as shifting the composition of capital inflows to a longer maturity, but no significant economic costs. Managers of small and medium-sized companies in Chile, however, claim that the encaje made it substantially more difficult to obtain financing for productive investment. This paper assesses whether the Chilean capital controls increased financial constraints for different-sized, publicly traded firms. It uses two different testing methodologies: a Tobin's-q and Euler-equation framework. Results indicate that during the encaje, smaller traded firms in Chile experienced significant financial constraints and these constraints decreased as firm size increased. Both before and after the encaje, however, no group of traded firms experienced significant financial constraints, and there is no relationship between firm size and financial constraints. Although Chilean-style capital controls may also have significant benefits, this cost of the encaje could be particularly important in emerging markets where smaller firms are valuable sources of job creation and economic growth. Keywords: Capital Controls, Encaje, Chile, Firm-financing Constraints. JEL Classifications: F3, F21, G1, G32, O16, O54.
Book Synopsis One Cost of the Chilean Capital Controls by : Kerbraz
Download or read book One Cost of the Chilean Capital Controls written by Kerbraz and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :Mr.Francisco Nadal De Simone Publisher :International Monetary Fund ISBN 13 :1451847238 Total Pages :56 pages Book Rating :4.4/5 (518 download)
Book Synopsis A Review of Capital Account Restrictions in Chile in the 1990s by : Mr.Francisco Nadal De Simone
Download or read book A Review of Capital Account Restrictions in Chile in the 1990s written by Mr.Francisco Nadal De Simone and published by International Monetary Fund. This book was released on 1999-04-01 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the Chilean experience with capital controls and reviews studies on controls on capital inflows. Controls on Chile’s inflows had only a temporary impact in reducing specific inflows because they were affected by avoidance. There is some evidence that controls increased interest rates and altered the composition of capital inflows. The studies, however, contain important methodological problems in measuring flows and significant econometric weaknesses, which cast doubt on the robustness of the estimates. No study has assessed the political economy of the controls. It seems premature to view the Chilean experience as supportive of controls on capital inflows.
Book Synopsis Chilean-type Capital Controls by : Claudia M. Buch
Download or read book Chilean-type Capital Controls written by Claudia M. Buch and published by . This book was released on 1999 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Managing Capital Flows by : Mr.Jaime Cardoso
Download or read book Managing Capital Flows written by Mr.Jaime Cardoso and published by International Monetary Fund. This book was released on 1998-12-01 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: As a result of the Asian crisis, methods of coping with volatile international capital markets have received considerable attention from observers and policymakers. It has been argued that the imposition by Chile of a nonremunerated reserve requirement on external borrowing played a useful role in the smooth liberalization of its capital account by allowing Chile to deal effectively with short-term capital inflows and thus to reduce its vulnerability to external shocks, and that such measures should be adopted by other countries. In light of this, this paper reviews Chile’s experience in managing capital flows and draws lessons for policymakers.
Book Synopsis The Effectiveness of Capital Controls by : Salvador Valdes-Prieto
Download or read book The Effectiveness of Capital Controls written by Salvador Valdes-Prieto and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Selective capital controls tax only some components of capital flows. One of the rationales for such controls is that they increase the scope for an independent monetary policy, without taxing foreign direct investment and other long-term flows. The first part of this paper offers a new framework to evaluate how selective capital controls might increase monetary autonomy, which considers two types of capital flows that coexist: the taxed and exempt flows. It is found that under free floating selective controls increase monetary autonomy, in the sense of allowing the authorities to set the path of the nominal exchange rate. But under predetermined exchange rate rules, the contribution of selective controls to monetary autonomy depends on the ability to reduce total inflows, which is an empirical matter. The second part describes the Chilean unremunerated reserve requirement (URR), a selective control introduced in June 1991 on a permanent basis, in a setting of predetermined exchange rates. This control collected substantial revenue, proving that it was relevant. An econometric model with data for 1987-1996 finds that substitution from the exempt short-term flows compensated reductions in taxed short-term flows, so the Chilean URR did not discourage total net short-term credit inflows to the private sector. This implies that the Chilean URR failed to contribute to monetary autonomy.
Book Synopsis Capital Controls and the Cost of Debt by : Eugenia Andreasen
Download or read book Capital Controls and the Cost of Debt written by Eugenia Andreasen and published by International Monetary Fund. This book was released on 2017-06-09 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a panel data set for international corporate bonds and capital account restrictions in advanced and emerging economies, we show that restrictions on capital inflows produce a substantial and economically meaningful increase in corporate bond spreads. A number of heterogeneities suggest that the effect of capital controls on inflows is particularly strong for more financially constrained firms, establishing a novel channel through which capital controls affect economic outcomes. By contrast, we do not find a robust significant effect of restrictions on outflows.
Book Synopsis Capital Controls in Chile by : Francisco Gallego
Download or read book Capital Controls in Chile written by Francisco Gallego and published by . This book was released on 1999 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Microeconomic Effects of Capital Controls by : Francisco Gallego
Download or read book Microeconomic Effects of Capital Controls written by Francisco Gallego and published by . This book was released on 2003 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis International Borrowing, Capital Controls and the Exchange Rate by : Kevin Cowan
Download or read book International Borrowing, Capital Controls and the Exchange Rate written by Kevin Cowan and published by . This book was released on 2005 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This paper analyzes the Chilean experience with capital flows. We discuss the role played by capital controls, financial regulations and the exchange rate regime. The focus is on the period after 1990, the period when Chile returned to international capital markets. We also discuss the early 80s, where a currency collapse triggered a financial crisis in Chile, despite stricter capital controls on inflows than the 90s and tighter currency matching requirements on the banking sector. We conclude that financial regulation and the exchange rate regime are at the center of capital inflows experiences and financial vulnerabilities. Rigid exchange rates induce vulnerabilities, which may lead to sharp capital account reversals. We also discuss three important characteristics of the Chilean experience since the 90s. The first is the fact that most international borrowing is done directly by corporations and it is not intermediated by the banking system. The second is the implication of the free trade agreement of Chilean and the US regarding capital controls. Finally, we examine the Chilean experience following the Asian-Russia crisis, showing that Chile did not suffer a sudden-stop, but a current account reversal due to policy reactions and a sudden-start in capital outflows"--NBER website
Book Synopsis Capital Controls by : Kristin Forbes
Download or read book Capital Controls written by Kristin Forbes and published by . This book was released on 2004 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Widespread support for capital account liberalization in emerging markets has recently shifted to skepticism and even support for capital controls in certain circumstances. This sea-change in attitudes has been bolstered by the inconclusive macroeconomic evidence on the benefits of capital account liberalization. There are several compelling reasons why it is difficult to measure the aggregate impact of capital controls in very different countries. Instead, a new and more promising approach is more detailed microeconomic studies of how capital controls have generated specific distortions in individual countries. Several recent papers have used this approach and examined very different aspects of capital controls from their impact on crony capitalism in Malaysia and on financing constraints in Chile, to their impact on US multinational behavior and the efficiency of stock market pricing. Each of these diverse studies finds a consistent result: capital controls have significant economic costs and lead to a misallocation of resources. This new microeconomic evidence suggests that capital controls are not just 'sand', but rather 'mud in the wheels' of market discipline"--NBER website
Download or read book Capital Controls written by Ms.Inci Ötker and published by International Monetary Fund. This book was released on 2000-05-17 with total page 135 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines country experiences with the use and liberalization of capital controls to develop a deeper understanding of the role of capital controls in coping with volatile capital flows, as well as the issues surrounding their liberalization. Detailed analyses of country cases aim to shed light on the motivations to limit capital flows; the role the controls may have played in coping with particular situations, including in financial crises and in limiting short-term inflows; the nature and design of the controls; and their effectivenes and potential costs. The paper also examines the link between prudential policies and capital controls and illstrates the ways in which better prudential practices and accelerated financial reforms could address the risks in cross-border capital transactions.
Book Synopsis How Effective are Capital Controls? by : Sebastian Edwards
Download or read book How Effective are Capital Controls? written by Sebastian Edwards and published by . This book was released on 1999 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the aftermath of the East Asian crisis a number of authors have argued that capital mobility is highly destabilizing, and that emerging countries would benefit from restricting capital flows. In this paper I investigate, from a historical perspective, the effectiveness of capital controls. I deal with Tobin taxes, controls on outflows and controls on inflows. I argue that controls on outflows have seldom worked as expected. They introduce major distortions and breed corruption. Market-based controls on inflows - similar to those implemented by Chile - have the potential for lengthening the maturity of foreign debt. They are not very effective, however, in achieving other objectives, including a higher degree of monetary policy independence.
Book Synopsis Stock Market Liquidity in Chile by : Mr.Luis Brandao-Marques
Download or read book Stock Market Liquidity in Chile written by Mr.Luis Brandao-Marques and published by International Monetary Fund. This book was released on 2016-11-16 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chile has a large but relatively illiquid stock market. Global factors such as global risk appetite and monetary policy in advanced economies are key cyclical determinants of liquidity in Chilean equities. Evidence from a cross-section of emerging markets suggests strong protection of minority shareholders can help improve stock market liquitidity. Currently, illiquid in Chilean may have to pay 31⁄2 percent more as cost of equity. Corporate governance should be improved, namely through the adoption of a stewardship code.
Book Synopsis Capital Account Liberalization by : Peter Blair Henry
Download or read book Capital Account Liberalization written by Peter Blair Henry and published by . This book was released on 2006 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Writings on the macroeconomic impact of capital account liberalization find few, if any, robust effects of liberalization on real variables. In contrast to the prevailing wisdom, I argue that the textbook theory of liberalization holds up quite well to a critical reading of this literature. The lion's share of papers that find no effect of liberalization on real variables tell us nothing about the empirical validity of the theory, because they do not really test it. This paper explains why it is that most studies do not really address the theory they set out to test. It also discusses what is necessary to test the theory and examines papers that have done so. Studies that actually test the theory show that liberalization has significant effects on the cost of capital, investment, and economic growth"--National Bureau of Economic Research web site.
Book Synopsis Managing Capital Flows by : Masahiro Kawai
Download or read book Managing Capital Flows written by Masahiro Kawai and published by Edward Elgar Publishing. This book was released on 2010-01-01 with total page 465 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.
