Exchange and Capital Controls as Barriers to Trade
Exchange and Capital Controls as Barriers to Trade

Author: Ms.Natalia T. Tamirisa

Publisher: International Monetary Fund

Published: 1998-06-01

Total Pages: 20

ISBN-13: 1451955197

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This paper considers the effect of exchange and capital controls on trade in the gravity-equation framework, in which bilateral exports depend on the distance between countries, the countries’ size and wealth, tariff barriers, and exchange and capital controls. The extent of exchange and capital controls is measured by unique indices. In view of the degree to which countries have liberalized their exchange systems, controls on current payments and transfers are found to be a minor impediment to trade, while capital controls significantly reduce exports into developing and transition economies. Thus, further capital account liberalization could significantly foster trade.

Collateral Damage
Collateral Damage

Author: Mr.Zhiwei Zhang

Publisher: International Monetary Fund

Published: 2007-01-01

Total Pages: 29

ISBN-13: 1451865724

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While new conventional wisdom warns that developing countries should be aware of the risks of premature capital account liberalization, the costs of not removing exchange controls have received much less attention. This paper investigates the negative effects of exchange controls on trade. To minimize evasion of controls, countries often intensify inspections at the border and increase documentation requirements. Thus, the cost of conducting trade rises. The paper finds that a one standard-deviation increase in the controls on trade payment has the same negative effect on trade as an increase in tariff by about 14 percentage points. A one standard-deviation increase in the controls on FX transactions reduces trade by the same amount as a rise in tariff by 11 percentage points. Therefore, the collateral damage in terms of foregone trade is sizable.

The Political Economy of Capital Controls
The Political Economy of Capital Controls

Author: Gunther G. Schulze

Publisher: Cambridge University Press

Published: 2000-05-04

Total Pages: 308

ISBN-13: 9780521582223

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A comprehensive study of capital controls, assesses the existing literature and presents original research.

Capital Controls and Trade Liberalization in a Monetary Economy
Capital Controls and Trade Liberalization in a Monetary Economy

Author: Mr.B. Jang

Publisher: International Monetary Fund

Published: 1999-03-01

Total Pages: 25

ISBN-13: 1451844123

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This paper reexamines Aizenman’s (1985) results on the effects of capital controls during unanticipated trade liberalization using an intertemporal optimizing monetary model. Unlike in Aizenman’s model, which is based on the currency substitution model, foreign money is an interest-bearing asset in this paper, and its major role is to smooth intertemporal consumption. With this modification, Aizenman’s results are reversed, thus showing that the effects of capital controls during trade liberalization would vary greatly depending on the role of foreign money in a country. The effects of an anticipated trade liberalization are also studied.

Estimated Policy Rules for Capital Controls
Estimated Policy Rules for Capital Controls

Author: Gurnain Kaur Pasricha

Publisher: International Monetary Fund

Published: 2020-06-05

Total Pages: 60

ISBN-13: 1513546104

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This paper borrows the tradition of estimating policy reaction functions from monetary policy literature to ask whether capital controls respond to macroprudential or mercantilist motivations. I explore this question using a novel, weekly dataset on capital control actions in 21 emerging economies from 2001 to 2015. I introduce a new proxy for mercantilist motivations: the weighted appreciation of an emerging-market currency against its top five trade competitors. This proxy Granger causes future net initiations of non-tariff barriers in most countries. Emerging markets systematically respond to both mercantilist and macroprudential motivations. Policymakers respond to trade competitiveness concerns by using both instruments—inflow tightening and outflow easing. They use only inflow tightening in response to macroprudential concerns. Policy is acyclical to foreign debt; however, high levels of this debt reduces countercyclicality to mercantilist concerns. Higher exchange rate pass-through to export prices, and having an inflation targeting regime with non-freely floating exchange rates, increase responsiveness to mercantilist concerns.

Capital Controls In Emerging Economies
Capital Controls In Emerging Economies

Author: Christine P Ries

Publisher: Routledge

Published: 2018-02-23

Total Pages: 221

ISBN-13: 0429981503

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This book looks at situations where a dramatic transformation of the political environment made existing institutions obsolete. It explores the use of capital controls in the reforming economies of the formerly communist countries.

Terms of Trade Disturbances, Real Exchange Rates, and Welfare
Terms of Trade Disturbances, Real Exchange Rates, and Welfare

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 1989-03-14

Total Pages: 32

ISBN-13: 1451921411

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Many arguments that have been advanced in favor of maintaining capital controls within the EC have not paid sufficient attention to the welfare consequences of this type of market intervention. Our paper provides a simple, optimizing framework in which the welfare consequences of capital controls can be assessed. Two main issues are considered. First, how do capital controls affect the adjustment of macroeconomic variables to real disturbances? Second, what is the nature of second best arguments for maintaining capital controls given that certain distortions will remain after the European single market is in place in 1992?

Capital Controls
Capital Controls

Author: Forrest Capie

Publisher:

Published: 2002

Total Pages: 132

ISBN-13:

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Free capital movements played an important part in the economic integration and globalisation of the nineteenth century. This work analyses historical experience with capital controls, in Britain and elsewhere, and reviews the theory. It concludes that such controls are damaging and that there is no case for reviving them.

Capital Control Measures
Capital Control Measures

Author: Andrés Fernández

Publisher: International Monetary Fund

Published: 2015-04-22

Total Pages: 32

ISBN-13: 1484332172

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This paper presents a new dataset of capital control restrictions on both inflows and outflows of 10 categories of assets for 100 countries over the period 1995 to 2013. Building on the data in Schindler (2009) and other datasets based on the analysis of the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), this dataset includes additional asset categories, more countries, and a longer time period. The paper discusses in detail the construction of the dataset and characterizes the data with respect to the prevalence and correlation of controls across asset categories and between controls on inflows and controls on outflows, the aggregation of the separate categories into broader indicators, and the comparison of this dataset with other indicators of capital controls.