Microeconomic Effects Of Capital Controls

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The Microeconomic Evidence on Capital Controls

Author : Kristin Forbes
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis The Microeconomic Evidence on Capital Controls by : Kristin Forbes

Download or read book The Microeconomic Evidence on Capital Controls written by Kristin Forbes and published by . This book was released on 2005 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Macroeconomic analyses of capital controls face a number of imposing challenges and have yielded mixed results to date. This paper takes a different approach and surveys an emerging literature that evaluates various microeconomic effects of capital controls and capital account liberalization. Several key themes emerge. First, capital controls tend to reduce the supply of capital, raise the cost of financing, and increase financial constraints - especially for smaller firms, firms without access to international capital markets and firms without access to preferential lending. Second, capital controls can reduce market discipline in financial markets and the government, leading to a more inefficient allocation of capital and resources. Third, capital controls significantly distort decision-making by firms and individuals, as they attempt to minimize the costs of the controls or even evade them outright. Fourth, the effects of capital controls can vary across different types of firms and countries, reflecting different pre-existing economic distortions. Finally, capital controls can be difficult and costly to enforce, even in countries with sound institutions and low levels of corruption. This microeconomic evidence on capital controls suggests that they have pervasive effects and often generate unexpected costs. Capital controls are no free lunch"--NBER website

Microeconomic Effects of Capital Controls

Author : Francisco Gallego
Publisher :
ISBN 13 :
Total Pages : 50 pages
Book Rating : 4.:/5 (318 download)

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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:

Capital Controls and International Portfolio Theory

Author : Ms.Marjorie B. Rose
Publisher : International Monetary Fund
ISBN 13 : 1451970579
Total Pages : 24 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis Capital Controls and International Portfolio Theory by : Ms.Marjorie B. Rose

Download or read book Capital Controls and International Portfolio Theory written by Ms.Marjorie B. Rose and published by International Monetary Fund. This book was released on 1990-06-01 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the effects of capital controls on asset prices. A closed-form valuation model by Eun and Janakirimanan (1986) is extended to analyze the impact of three restrictions on international portfolio investment: a percentage quantity constraint on the amount of foreign securities a domestic resident may hold in her portfolio; a constraint on the absolute amount of foreign securities a domestic resident may hold; and a percentage tax on the domestic purchase price of a foreign security. Comparative statics and numerical analysis are used to reveal the effects of these distortions on domestic and world equilibrium prices.

The Microeconomic Evidence on Capital Controls

Author : Kristin J. Forbes
Publisher :
ISBN 13 :
Total Pages : 39 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis The Microeconomic Evidence on Capital Controls by : Kristin J. Forbes

Download or read book The Microeconomic Evidence on Capital Controls written by Kristin J. Forbes and published by . This book was released on 2010 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroeconomic analyses of capital controls face a number of imposing challenges and have yielded mixed results to date. This paper takes a different approach and surveys an emerging literature that evaluates various microeconomic effects of capital controls and capital account liberalization. Several key themes emerge. First, capital controls tend to reduce the supply of capital, raise the cost of financing, and increase financial constraints - especially for smaller firms, firms without access to international capital markets and firms without access to preferential lending. Second, capital controls can reduce market discipline in financial markets and the government, leading to a more inefficient allocation of capital and resources. Third, capital controls significantly distort decision-making by firms and individuals, as they attempt to minimize the costs of the controls or even evade them outright. Fourth, the effects of capital controls can vary across different types of firms and countries, reflecting different pre-existing economic distortions. Finally, capital controls can be difficult and costly to enforce, even in countries with sound institutions and low levels of corruption. This microeconomic evidence on capital controls suggests that they have pervasive effects and often generate unexpected costs. Capital controls are no free lunch.

The Macroeconomic Effects of Capital Controls and the Stabilization of the Balance of Trade

Author : Mr.Enrique G. Mendoza
Publisher : International Monetary Fund
ISBN 13 : 1451946058
Total Pages : 54 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis The Macroeconomic Effects of Capital Controls and the Stabilization of the Balance of Trade by : Mr.Enrique G. Mendoza

Download or read book The Macroeconomic Effects of Capital Controls and the Stabilization of the Balance of Trade written by Mr.Enrique G. Mendoza and published by International Monetary Fund. This book was released on 1990-11-01 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: A dynamic stochastic equilibrium model of a small open economy is used to quantify the macroeconomic effects of introducing capital controls to stabilize the balance of trade. This model focuses on the role of international trade and foreign debt as instruments that help smooth consumption in response to productivity or terms-of-trade disturbances. The model rationalizes some key empirical regularities that characterize business fluctuations and the dynamics of savings and investment in post-war Canada. The results show that capital controls have small effects on both the basic characteristics of macroeconomic fluctuations and the level of welfare. A fiscal strategy that successfully enforces capital controls by introducing taxes on foreign interest income is also studied in some detail.

The Political Economy of Capital Controls

Author : Gunther G. Schulze
Publisher : Cambridge University Press
ISBN 13 : 9780521582223
Total Pages : 308 pages
Book Rating : 4.5/5 (822 download)

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Book Synopsis The Political Economy of Capital Controls by : Gunther G. Schulze

Download or read book The Political Economy of Capital Controls written by Gunther G. Schulze and published by Cambridge University Press. This book was released on 2000-05-04 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive study of capital controls, assesses the existing literature and presents original research.

Economic Effects and Structural Determinants of Capital Controls

Author : Mr.Vittorio Grilli
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 54 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Economic Effects and Structural Determinants of Capital Controls by : Mr.Vittorio Grilli

Download or read book Economic Effects and Structural Determinants of Capital Controls written by Mr.Vittorio Grilli and published by International Monetary Fund. This book was released on 1995-03 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies determinants and effects of capital controls using a panel of 61 developed and developing countries. The results suggest that capital account restrictions are more likely to be in place in countries with low income, a large share of government, and where the central bank is not independent. Other determinants of controls include the exchange rate regime, current account imbalances and the degree of openness of the economy. We also find that capital controls and other foreign exchange restrictions are associated with higher inflation and lower real interest rates. We do not find any robust correlation between our measures of controls and the rate of growth, although there is evidence that countries with large black market premia grow more slowly.

Capital Controls and the Cost of Debt

Author : Eugenia Andreasen
Publisher : International Monetary Fund
ISBN 13 : 1484303318
Total Pages : 26 pages
Book Rating : 4.4/5 (843 download)

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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.

International Capital Flows: Economic Problems and Policy Implications

Author : Nina Pohl
Publisher : diplom.de
ISBN 13 : 3832426418
Total Pages : 207 pages
Book Rating : 4.8/5 (324 download)

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Book Synopsis International Capital Flows: Economic Problems and Policy Implications by : Nina Pohl

Download or read book International Capital Flows: Economic Problems and Policy Implications written by Nina Pohl and published by diplom.de. This book was released on 2000-09-01 with total page 207 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inhaltsangabe:Abstract: This paper deals with three highly controversial aspects in the international finance literature: the degree of international financial integration, the economic impact of capital mobility, and the potential role of capital controls in the emerging international financial architecture. Regarding the first aspect, many observers have been influenced by the recent hype about globalisation and in fact take it for granted that capital markets have become almost fully integrated into a world financial marketplace. This paper, reviews evidence that challenges this conventional wisdom, though confirming that the degree of international financial integration is rising. With respect to the second aspect, it is demonstrated that there are circumstances under which the free flow of international capital could negatively impact upon economic performance and/or otherwise welfare-enhancing domestic policies. This finding conflicts with traditional theory and provides an economic rationale for the judicious introduction of capital controls. With this assertion in mind, the final aspect, the role of capital controls, is investigated. The specific question explored is how far restrictions on international capital flows are able to avert a costly economic imbalance arising from fluctuations in the balance of payments. Although the international consensus seems to have shifted in recent years towards promoting Chilean-style capital controls as a potential new building block in the international financial landscape, this paper cautions against such a generalisation of the Chilean experience. Rather, a review of the empirical literature suggests that much of Chile s economic success story in the last decade can be explained by factors other than its control regime. The rising degree of international financial integration enhances the need for small countries to resolve their dilemma of being dependent on external funding and, at the same time, most vulnerable to sudden reversals of international capital flows. Yet, simple solutions of how to counterbalance the potential threats of capital mobility in a second-best equilibrium, are not found to be easily forthcoming. In particular, this paper argues that capital controls are no panacea even less so, if they delay necessary macro- and microeconomic reforms. A worrying feature of the international financial system, partly due to continued innovations in financial engineering, is that [...]

Capital Controls

Author : Kristin Forbes
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (318 download)

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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

Capital Controls, Exchange Rates, and Monetary Policy in the World Economy

Author : Sebastian Edwards
Publisher : Cambridge University Press
ISBN 13 : 9780521597111
Total Pages : 452 pages
Book Rating : 4.5/5 (971 download)

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Book Synopsis Capital Controls, Exchange Rates, and Monetary Policy in the World Economy by : Sebastian Edwards

Download or read book Capital Controls, Exchange Rates, and Monetary Policy in the World Economy written by Sebastian Edwards and published by Cambridge University Press. This book was released on 1997-06-13 with total page 452 pages. Available in PDF, EPUB and Kindle. Book excerpt: The essays collected in this volume discuss the impact of increased capital mobility on macroeconomic performance.

Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows

Author : Mr.Martin Schindler
Publisher : International Monetary Fund
ISBN 13 : 1451873557
Total Pages : 34 pages
Book Rating : 4.4/5 (518 download)

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Book Synopsis Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows by : Mr.Martin Schindler

Download or read book Controlling Capital? Legal Restrictions and the Asset Composition of International Financial Flows written by Mr.Martin Schindler and published by International Monetary Fund. This book was released on 2009-09-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: How effective are capital account restrictions? We provide new answers based on a novel panel data set of capital controls, disaggregated by asset class and by inflows/outflows, covering 74 countries during 1995-2005. We find the estimated effects of capital controls to vary markedly across the types of capital controls, both by asset categories, by the direction of flows, and across countries' income levels. In particular, both debt and equity controls can substantially reduce outflows, with little effect on capital inflows, but only high-income countries appear able to effectively impose debt (outflow) controls. The results imply that capital controls can affect both the volume and the composition of capital flows.

Domestic and Multilateral Effects of Capital Controls in Emerging Markets

Author : Gurnain Pasricha
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Domestic and Multilateral Effects of Capital Controls in Emerging Markets by : Gurnain Pasricha

Download or read book Domestic and Multilateral Effects of Capital Controls in Emerging Markets written by Gurnain Pasricha and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a novel, high frequency dataset on capital control actions in 16 emerging market economies (EMEs) from 2001 to 2012, we provide new insights into the domestic and multilateral effects of capital controls. Increases in capital account openness reduce monetary policy autonomy and increase exchange rate stability, confirming the constraints of the monetary policy trilemma. Both gross in- and outflows rise, while the effect on net capital flows is ambiguous. Tighter capital inflow restrictions generated significant spillovers, especially in the post-2008 environment of abundant global liquidity. We also find evidence of a domestic policy response to foreign capital control changes in countries that are affected by these spillovers.

International Capital Flows: Economic Impact and Policy Implications

Author : Nina Gillmann
Publisher : GRIN Verlag
ISBN 13 : 3656980942
Total Pages : 213 pages
Book Rating : 4.6/5 (569 download)

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Book Synopsis International Capital Flows: Economic Impact and Policy Implications by : Nina Gillmann

Download or read book International Capital Flows: Economic Impact and Policy Implications written by Nina Gillmann and published by GRIN Verlag. This book was released on 2012-08-08 with total page 213 pages. Available in PDF, EPUB and Kindle. Book excerpt: Diploma Thesis from the year 2000 in the subject Economics - Finance, grade: 1, Christian-Albrechts-University of Kiel, language: English, abstract: This paper deals with three highly controversial aspects in the international finance literature: the degree of international financial integration, the economic impact of capital mobility, and the potential role of capital controls in the emerging international financial architecture. Regarding the first aspect, many observers have been influenced by the recent hype about “globalisation” and in fact take it for granted that capital markets have become almost fully integrated into a world financial marketplace. This paper, reviews evidence that challenges this conventional wisdom, though confirming that the degree of international financial integration is rising. With respect to the second aspect, it is demonstrated that there are circumstances under which the free flow of international capital could negatively impact upon economic performance and/or otherwise welfare-enhancing domestic policies. This finding conflicts with traditional theory and provides an economic rationale for the judicious introduction of capital controls. With this assertion in mind, the final aspect, the role of capital controls, is investigated. The specific question explored is how far restrictions on international capital flows are able to avert a costly economic imbalance arising from fluctuations in the balance of payments. Although the international consensus seems to have shifted in recent years towards promoting Chilean-style capital controls as a potential new building block in the international financial landscape, this paper cautions against such a generalisation of the Chilean experience. Rather, a review of the empirical literature suggests that much of Chile‘s economic success story in the last decade can be explained by factors other than its control regime. The rising degree of international financial integration enhances the need for small countries to resolve their dilemma of being dependent on external funding and, at the same time, most vulnerable to sudden reversals of international capital flows. Yet, simple solutions of how to counterbalance the potential threats of capital mobility in a second-best equilibrium, are not found to be easily forthcoming. In particular, this paper argues that capital controls are no panacea – even less so, if they delay necessary macro- and microeconomic reforms.

Are capital controls a useful instrument of economic policy?

Author : Daniel Detzer
Publisher : GRIN Verlag
ISBN 13 : 3640660358
Total Pages : 16 pages
Book Rating : 4.6/5 (46 download)

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Book Synopsis Are capital controls a useful instrument of economic policy? by : Daniel Detzer

Download or read book Are capital controls a useful instrument of economic policy? written by Daniel Detzer and published by GRIN Verlag. This book was released on 2010-07-13 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2010 in the subject Economics - Monetary theory and policy, grade: 1,3, Berlin School of Economics and Law, course: International Trade and Monetary Economics, language: English, abstract: “Loose funds may sweep round the world disorganizing all steady business. Nothing is more certain than that the movement of capital funds must be regulated” Keynes, J.M. Already Keynes warned against a free movement of capital. Those warnings were taken seriously by the international community and the IMF allowed in its articles the use of capital controls. The attitude towards those controls changed remarkably during the 1980`s when a general trend towards deregulation occurred. This trend peaked in an attempt to include the purpose of liberalizing capital movements in the Articles of Agreements of the IMF. Coinciding with the Asian Crisis, parts of the academic profession heavily opposed this idea and eventually, some of the fund`s representatives revised their general opposition against capital controls. Nonetheless, in big parts of the academic profession, capital controls carry a negative smack and the ultimate goal of free capital flows is promoted. With the financial crisis, however, capital controls came into vogue again. Recently, Brazil introduced a tax on foreign portfolio investment. Also at the G20 level, ways on how to regulate international capital flows are discussed. Whether this should be seen as a desirable development or not, boils down to the question if capital controls are a useful instrument of economic policy? In general capital controls are any kind of policy that limits or redirects capital account transactions. So, the above mentioned question can be answered by looking at the situation of a fully liberalized capital account with its associated cost and benefits and see if state intervention in form of capital controls would be able to improve the situation. This discussion shall first rest on theoretical considerations and outline possible benefits of free capital flows. Thereafter, an important assumption, namely the Efficient Market Theorem, which allows for the prediction of those benefits, will be discussed. Subsequently, by dropping the EMT and introducing Keynesian uncertainty an alternative scenario is drawn and the effect of capital controls within this framework is examined. After this, some of the empirical research regarding the benefits of free capital flows will be examined and some of the areas where capital controls can play a beneficial role are introduced to the reader. Finally, the insights gained in the course of this paper will be summarized and an answer to the stated question will be given.

Managing Capital Flows

Author : Masahiro Kawai
Publisher : Edward Elgar Publishing
ISBN 13 : 184980687X
Total Pages : 465 pages
Book Rating : 4.8/5 (498 download)

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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.

Capital Controls and Capital Flows in Emerging Economies

Author : Sebastian Edwards
Publisher : University of Chicago Press
ISBN 13 : 0226184994
Total Pages : 699 pages
Book Rating : 4.2/5 (261 download)

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Book Synopsis Capital Controls and Capital Flows in Emerging Economies by : Sebastian Edwards

Download or read book Capital Controls and Capital Flows in Emerging Economies written by Sebastian Edwards and published by University of Chicago Press. This book was released on 2009-02-15 with total page 699 pages. Available in PDF, EPUB and Kindle. Book excerpt: Some scholars argue that the free movement of capital across borders enhances welfare; others claim it represents a clear peril, especially for emerging nations. In Capital Controls and Capital Flows in Emerging Economies, an esteemed group of contributors examines both the advantages and the pitfalls of restricting capital mobility in these emerging nations. In the aftermath of the East Asian currency crises of 1997, the authors consider mechanisms that eight countries have used to control capital inflows and evaluate their effectiveness in altering the maturity of the resulting external debt and reducing macroeconomic vulnerability. This volume is essential reading for all those interested in emerging nations and the costs and benefits of restricting international capital flows.