Financial Development and the Effects of Capital Controls

Bush, Georgia

doi:10.1007/s11079-018-09521-7

Cited by 15 publications

(6 citation statements)

References 42 publications

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“…Thus, following previous studies (Basu & Das, 2016; Crivelli et al, 2012), the 2SLS technique was adopted for the estimation. The first and second lags of output are used as instruments in the estimation (as in Bush, 2019; Di Caro & Sacchi, 2020). In drafting the data for estimating Equation (4), elasticities for the 37 countries in the three sub‐periods were pooled to obtain a total of 111 observations.…”

Section: Methodsmentioning

confidence: 99%

Macroeconomic policies and sustainable employment yields in sub‐Saharan Africa

Adegboye

2020

African Development Review

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The impact of macroeconomic policies on employment yields from output growth in sub-Saharan African countries is examined in this study. Data for 37 countries are used for the period 1991-2016 and sustainable employment yields are obtained by comparing employment elasticities for own-account (vulnerable) and employers (formal) groups. The two-stage least squares method is used to estimate employment elasticities for the panel datasets for three sub-periods (1991-1999, 2000-2009, 2010-2016), and the feasible generalised least squares method is used to estimate the effects of policies on employment elasticities based on a pooled dataset for the three sub-periods. Policy efforts are shown to be more effective if moved towards more flexible and targeted tax regimes, more rigid labour markets, and liberalised trade. On the other hand, investment and industrial policies do not appear to exert unidirectional effects on employment, especially given wide variations in government sizes and relative shares of domestic/foreign investment among the countries. There is also evidence that policy influences are more practicable with more formal employment groups. Patterns of macroeconomic policy directions are therefore critical to their effectiveness as labour market adjustment tools in the region.

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Section: Methodsmentioning

confidence: 99%

Macroeconomic policies and sustainable employment yields in sub‐Saharan Africa

Adegboye

2020

African Development Review

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“…The cyclical and countercyclical behaviors of capital controls should produce asymmetric impacts on exporting and importing countries. A second related topic is the role of financial development in supporting capital control actions (Bush, 2019). For instance, Bush (2019) provides evidence that the impact of capital controls is influenced by the level of financial development.…”

Section: Literature Reviewmentioning

confidence: 99%

“…A second related topic is the role of financial development in supporting capital control actions (Bush, 2019). For instance, Bush (2019) provides evidence that the impact of capital controls is influenced by the level of financial development. He found that a high level of financial development supports the impact of the restrictive policy; therefore, policymakers need to choose between more financial liberalization or restricted capital account and act through targeted controls.…”

Section: Literature Reviewmentioning

confidence: 99%

“…A close link exists between the development of the financial system and the quality of financial institutions (Eichengreen & Rose, 2014). Bush (2019) found that capital control actions are amplified in a more developed financial system, through enforcing targeted controls to alter international trade. A number of papers examine the linkage between financial development and trade.…”

Section: Capital Control-related Issues and Robustness Checkmentioning

confidence: 99%

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The Volatility Lowering Effects of Capital Controls

Zehri

2022

Global Journal of Emerging Market Economies

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The evidence that capital controls adversely affect cross-border trade is debatable. This study shows that capital controls may support international trade by mitigating the negative effect of macroeconomic volatility. We use quarterly data from a sample of 25 emerging countries over the period 2011–2019. Using long- and short-standing capital control dynamic panel models, and diversifying robust estimation techniques, our results show that capital controls alleviate the adverse effects of the exchange rate, interest rate differential, and inflation volatilities. The long-lasting capital controls (walls) are more effective than short-lasting capital controls (gates). Besides, the effects of these controls are asymmetric regarding the financial development level and category of flows. The study highlights the beneficial role of macroprudential policy in supporting capital control actions. The results of this study have two main policy implications, the effectiveness of “walls” controls and the importance of macroeconomic policy coordination.

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“…Cerutti et al (2019) note that the relative importance of "push" factors varies greatly by type of flow. Bush (2019), for example, finds that capital account opening affects levels of FDI and inward equity flows, but not portfolio debt flows. Ghosh and Qureshi (2016) find that, compared to FDI, portfolio debt flows are associated with larger macroeconomic imbalances and financial vulnerabilities.…”

Section: Related Literaturementioning

confidence: 99%

Emerging market capital flows: the role of fund manager portfolio allocation

Bush¹,

Cañón²,

Gray³

2021

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Empleamos datos desagregados de las tenencias de los fondos de inversión globales para distinguir entre las dos razones por las que pueden cambiar las tenencias de bonos de economías de mercado emergentes (EMEs) por parte de los fondos: (i) el monto invertido en el fondo puede cambiar y (ii) el administrador del fondo puede modificar la asignación del portafolio. Encontramos que la respuesta de los fondos a las condiciones macroeconómicas globales, "push factors", se explica por las decisiones de los inversionistas del fondo. Por otro lado, la respuesta de los fondos a las condiciones macroeconómicas locales, "pull factors", se explica por las reasignaciones en las tenencias por cuenta de los administradores de los fondos. Adicionalmente, identificamos otros factores instituciones que impactan las decisiones de reasignación: cambios en el apalancamiento, su índice de referencia, y su apetito de riesgo (los fondos reasignan recursos hacia EMEs más seguros ante incrementos en factores globales de riesgo).

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Financial Development and the Effects of Capital Controls

Cited by 15 publications

References 42 publications

Macroeconomic policies and sustainable employment yields in sub‐Saharan Africa

Macroeconomic policies and sustainable employment yields in sub‐Saharan Africa

The Volatility Lowering Effects of Capital Controls

Emerging market capital flows: the role of fund manager portfolio allocation

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