Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
How Effective Are Capital Controls?
Journal of Economic Perspectives
vol. 13,
no. 4, Fall 1999
(pp. 65–84)
(Complimentary)
Abstract
A number of authors have recently argued that, in order to avoid financial instability, emerging countries should rely on capital controls. Two type of controls have been considered: controls on capital outflows, and controls on capital inflows. In this paper I review the historical evidence on the effectiveness of these two type of controls. I argue that controls on outflows have been ineffective. They are circumvented and breed corruption. I also analyze Chile's recent experience with controls on inflows, and I argue that their effectiveness has been exaggerated.Citation
Edwards, Sebastian. 1999. "How Effective Are Capital Controls?" Journal of Economic Perspectives, 13 (4): 65–84. DOI: 10.1257/jep.13.4.65JEL Classification
- F32 Current Account Adjustment; Short-term Capital Movements
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O19 International Linkages to Development; Role of International Organizations
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