Domestic and multilateral effects of capital controls in emerging markets
By G. Pasricha, Matteo Falagiarda, M. Bijsterbosch, Joshua Aizenman. Journal of International Economics, 2018
120 citations recorded by the source corpus.
Using a novel, high frequency dataset on capital control actions in 16 emerging market economies (EMEs) from 2001 to 2012, we provide new evidence on 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.
Subfields: Finance
View Paper: https://www.semanticscholar.org/paper/a517a488d6dda6f1aefb16875ebecca17e7ff3dc
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Citations in the corpus
- On the global financial market integration “swoosh” and the trilemma (2019, unknown): “There is also a thriving literature documenting the recent surge in capital controls in emerging markets, along with their economic effects (see e.g. Jeanne and Korinek (2010), Ostry et al. (2012), Forbes, Fratzscher and Straub (2013), Pasricha et al. (2015), among many others).”
- Changes in Prudential Policy Instruments - A New Cross-Country Database (2016, methodology): “To construct the prudential policy indexes reported in the database, we use a method to map policy changes into simple indexes that has recently been used in studies focusing on the intensity of capital controls (Ahmed and Zlate 2014; Pasricha et al. 2015) and macroprudential policies (Akinci and Ol”
- Capital Controls: Theory and Evidence (2019, unknown): “Using novel, high-frequency data on capital controls for 16 emerging market economies from 2001 to 2012, Pasricha et al. (2018) find that tightening capital inflow restrictions generated significant spillovers, particularly in the post-2008 period of high global liquidity.”