Capital Controls: A Survey of the New Literature

Rebucci, Alessandro; Ma, Chang

doi:10.2139/ssrn.3495987

Cited by 13 publications

(11 citation statements)

References 73 publications

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“…In this subsection, we ask how the fiscal policy that supports the desired equilibrium looks like. As is well known, in environments like the one studied here, the Ramsey optimal allocation can be supported by a capital control tax (see, for example, Korinek, 2010;Bianchi, 2011;Benigno et al 2013 andBianchi and Mendoza, 2018;Dávila and Korinek, 2018;Jeanne and Korinek, 2019; and the survey by Rebucci and Ma, 2019). Specifically, suppose the government imposes capital controls that take the form of a proportional tax on debt at the rate τ t .…”

Section: Optimal Capital Control Policymentioning

confidence: 98%

Deterministic debt cycles in open economies with flow collateral constraints

Schmitt–Grohé

Uribe

2021

Journal of Economic Theory

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Section: Optimal Capital Control Policymentioning

confidence: 98%

Deterministic debt cycles in open economies with flow collateral constraints

Schmitt–Grohé

Uribe

2021

Journal of Economic Theory

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“…The main criticism directed at studies on capital flows restrictions is the choice of indexes as a proxy of this restrictive policy. Multiple indexes have been used in the empirical literature, and the respective results are also diverse [Chinn, Ito, 2008;Edison, Warnock, 2003;Eichengreen, Rose, 2014;Fernández et al, 2016;Rebucci, Ma, 2019]. The major dataset used to reflect the restrictions policy on capital flows is presented by A. Fernández et al [2016].…”

Section: Data Descriptionmentioning

confidence: 99%

Restrictions on Capital Flows and International Financial Institutions’ Support

Zehri¹,

Al-Sulail²

2020

IORJ

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n the wake of the 2008 financial crisis, international financial institutions have changed their views on the benefits of capital account liberalization and the management of capital flows. The International Monetary Fund (IMF) began to publicly express support for what have traditionally been referred to as “capital controls.” The impacts of restrictions on capital flows have, unfortunately, still not been established, and capital controls create distortions if they remain in place indefinitely. The present study uses quarterly data on capital controls in 25 emerging economies over the period between 2000 and 2016. Through an examination of a panel vector autoregressive (PVAR) with variance decomposition and impulse-response functions analysis, the study provides further evidence of some domestic effects of restrictions on capital flows. The results show that restrictions were more effective following the 2008 financial crisis and allowed for more monetary policy autonomy and exchange rate stability. Unexpectedly, the findings do not show any significant impact on international reserves accumulation. The study highlights the necessity of following the international financial organizations’ guidelines to well manage external capital flows and to better coordinate macroeconomic policies in the hope of finding an optimal policy mix.

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“…For example, seeChen et al (2014),Albagli et al (201 9), and Kalemli-Özcan (2019) for the spillovers via risk perceptions and exchange rates; andBruno and Shin (2015a, b),Barroso et al (2016),Morais et al (2019),Cecchetti et al (2020), for thos e via cross-border credits and financial firms' leverage.6 For the literature survey on policy effects, seeGalati and Moessner (2018) andAraujo et al (2020) for macroprudential poli cy;Erten et al (2020) andRebucci and Ma (2019) for capital flow management measures; andSarno and Taylor (2001) andChamon et al (2019) for foreign exchange intervention.©International Monetary Fund. Not for Redistribution…”

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confidence: 99%

Addressing Spillovers from Prolonged U.S. Monetary Policy Easing

Narita¹,

Cecchetti²,

Rawat³

et al. 2021

IMF Working Papers

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There is growing recognition that prolonged monetary policy easing of major economies can have extraterritorial spillovers, driving up financial system leverage in other countries. When faced with such a rise of threats to financial stability, what can countries do? Specifically, is there a role for macroprudential tools, capital controls or foreign exchange intervention in safeguarding financial stability from risks arising externally? We examine the efficacy of these policy interventions by exploring whether preemptive or reactive policy interventions can mitigate such risks. Using a sample of 950 bank and nonbank financial firms across 28 non-U.S. economies over the past two decades, we show that if policymakers are able to implement policies prior to an additional consecutive decline in U.S. interest rates, financial institutions do not increase their leverage by as much as they otherwise would. By contrast, it is more difficult to counter the spillovers with reactive policy interventions. In practice, however, policymakers need to remain cautious about the timing of preventative tightening, especially when their economies face large negative shocks such as a pandemic.

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Capital Controls: A Survey of the New Literature

Cited by 13 publications

References 73 publications

Deterministic debt cycles in open economies with flow collateral constraints

Deterministic debt cycles in open economies with flow collateral constraints

Restrictions on Capital Flows and International Financial Institutions’ Support

Addressing Spillovers from Prolonged U.S. Monetary Policy Easing

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