Are Capital Controls Prudential? An Empirical Investigation / Andrés Fernández, Alessandro Rebucci, Martín Uribe.

Format:

Book

Author/Creator:

Fernández, Andrés.

Contributor:

National Bureau of Economic Research.

Rebucci, Alessandro.

Uribe, Martín.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19671.

NBER working paper series no. w19671

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2013.

Summary:

A growing recent theoretical literature advocates the use of prudential capital control policy, that is, the tightening of restrictions on cross-border capital flows during booms and the relaxation thereof during recessions. We examine the behavior of capital controls in a large number of countries over the period 1995-2011. We find that capital controls are remarkably acyclical. Boom-bust episodes in output, the current account, or the real exchange rate are associated with virtually no movements in capital controls. These results are robust to decomposing boom-bust episodes along a number of dimensions, including the level of development, the level of external indebtedness, or the exchange-rate regime. We also document a near complete acyclicality of capital controls during the Great Contraction of 2007-2009.

Notes:

Print version record

November 2013.