Download or read book Essays on Capital Flows and Capital Controls written by Po-Hsin Tseng and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation comprises four main chapters that examine issues surrounding capital flows and capital controls. Chapter 1 outlines the dissertation. Chapter 2 discusses several key themes in the literature on capital flows and capital controls. First, I discuss and compare the measures of capital flows and how they are commonly used. I show that net capital flows provide relevant information on investment-saving decisions. However, net capital flows may provide a false sense of security. Gross flows, on the other hand, provide information that is more relevant to financial stability. Second, I summarize various risks associated with capital flows into two broad categories and relate them to policy objectives against which the efficacy of capital controls is evaluated. I show that various macroeconomic risks associated with capital flows could be broadly grouped into (1) loss of export competitiveness and (2) increased financial instability. In terms of policy objectives, the main policy objectives are whether capital controls are able to (1) reduce real exchange market pressures, and (2) allow for a more independent monetary policy, (3) reduce the volume of capital flows, (4) alter the compositions of capital flows toward longer-maturity flows, and (5) reduce the frequency of disruptive adjustments such as currency crises and severe output loss. Third, I compare the framework used to document capital controls to the framework used to document capital flows. In doing so, I draw the de jure connections between measures of capital flows and measures of capital controls. Not only do the connections help one classify capital controls, but they also identify the exact types of capital flows that various types of capital controls intend to regulate. Fourth, I discuss major capital control indices in terms of the main considerations that are commonly involved to construct these indices, including (1) what to measure, (2) what asset categories to cover, (3) what data sources to use, and (4) what coding algorithms and weighting schemes to use to convert raw data to composite indices. Fifth, I compare and contrast major publicly-available capital control indices both at the world level and at a country level for selected countries (Brazil and South Korea). Finally, I synthesize studies on the effectiveness of capital controls and summarize possible factors that may have contributed to the inconclusiveness of the results from the existing studies. By surveying the literature, I find that possible factors include difficulties in (1) measuring capital controls, (2) obtaining capital flow data with high frequency, (3) standardizing the scope of capital flows, (4) addressing the selection bias problem, and (5) controlling for circumvention of capital controls and institutional quality. Chapter 3 examines whether countries with capital controls are less likely to experience capital surges and capital stops. I use a propensity score matching method to address the issue of selection bias, which arises when observations with capital controls have distinct characteristics that influence both the probability of imposing capital controls and the probability of experiencing capital surges and stops. These distinct characteristics, when not properly controlled for, can give rise to a biased estimate of the effect of capital controls. I use a propensity score matching method on a large data set of country-time observations. The data set encompasses both developed and developing countries and covers the period 1995-2016. The results of Chapter 3 show that capital controls may be effective, but only for observations that have not imposed capital controls. In addition, only capital controls that involve the use of inflow controls appear to be effective. Chapter 4 addresses why some episodes of gross inflow surges ended in financial crises. Using a common set of 53 countries that include both advanced and emerging countries, I show that both global factors (such as investors' risk aversion) and domestic factors (such as domestic credit growth, foreign exchange reserves, institutional quality, and capital controls) play roles in explaining the endings of surge episodes. The effect of capital controls depends on a country's institutional quality. For countries with lower institutional quality, imposing capital controls does not decrease the probability of hard landing. Capital controls only start to contribute to a lower probability of hard landings when the institutional quality of a country is above a threshold. Chapter 5 examines the spillover effects of foreign-implemented capital controls. I propose-from a domestic country's perspective-that foreign-implemented capital controls can affect domestic capital flows in the flowing ways. First, foreign-implemented inflow controls may reduce domestic outflows going into these foreign countries, due to the bilateral linkages between these foreign countries and the domestic country (the domestic-outflow-reduction hypothesis). Second, foreign-implemented outflow controls may reduce the domestic inflows from these foreign countries, again due to the bilateral linkages between these foreign countries and the domestic country (hereafter, the domestic-inflow-reduction hypothesis). Third, foreign-implemented inflow controls may deflect capital flows-originally going to these foreign countries-to the domestic country (hereafter, the deflection hypothesis). The findings of this chapter support the existence of spillover effects. For the three hypotheses, I find that tightening of foreign-implemented inflow controls-measured by increases in trade-weighted and geographic-proximity-weighted inflow control indices of other countries in the rest of the world-reduces domestic outflows, while tightening of foreign-implemented outflow controls-measured by increases in trade-weighted and geographic-proximity-weighted outflow control indices of other countries in the rest of the world-reduces domestic inflows. In addition, tightening of inflow controls implemented in foreign countries-measured by finance-weighted capital control indices of other countries in the rest of the world-divert capital inflows away from the domestic country. The results suggest that foreign-implemented capital controls have signaling effects on domestic capital flows via common lenders. When one country implements inflow capital controls, the policy actions prompt the common lenders to perceive that other countries with similar borrowing patterns are likely to become less supportive of foreign investment. As such, global investors retreat their investment, leading to reductions in domestic inflows.

Download or read book Are capital controls a useful instrument of economic policy written by Daniel Detzer and published by GRIN Verlag. This book was released on 2010-07-13 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Essay from the year 2010 in the subject Economics - Monetary theory and policy, grade: 1,3, Berlin School of Economics and Law, course: International Trade and Monetary Economics, language: English, abstract: “Loose funds may sweep round the world disorganizing all steady business. Nothing is more certain than that the movement of capital funds must be regulated” Keynes, J.M. Already Keynes warned against a free movement of capital. Those warnings were taken seriously by the international community and the IMF allowed in its articles the use of capital controls. The attitude towards those controls changed remarkably during the 1980`s when a general trend towards deregulation occurred. This trend peaked in an attempt to include the purpose of liberalizing capital movements in the Articles of Agreements of the IMF. Coinciding with the Asian Crisis, parts of the academic profession heavily opposed this idea and eventually, some of the fund`s representatives revised their general opposition against capital controls. Nonetheless, in big parts of the academic profession, capital controls carry a negative smack and the ultimate goal of free capital flows is promoted. With the financial crisis, however, capital controls came into vogue again. Recently, Brazil introduced a tax on foreign portfolio investment. Also at the G20 level, ways on how to regulate international capital flows are discussed. Whether this should be seen as a desirable development or not, boils down to the question if capital controls are a useful instrument of economic policy? In general capital controls are any kind of policy that limits or redirects capital account transactions. So, the above mentioned question can be answered by looking at the situation of a fully liberalized capital account with its associated cost and benefits and see if state intervention in form of capital controls would be able to improve the situation. This discussion shall first rest on theoretical considerations and outline possible benefits of free capital flows. Thereafter, an important assumption, namely the Efficient Market Theorem, which allows for the prediction of those benefits, will be discussed. Subsequently, by dropping the EMT and introducing Keynesian uncertainty an alternative scenario is drawn and the effect of capital controls within this framework is examined. After this, some of the empirical research regarding the benefits of free capital flows will be examined and some of the areas where capital controls can play a beneficial role are introduced to the reader. Finally, the insights gained in the course of this paper will be summarized and an answer to the stated question will be given.

Download or read book Essays in Sterilized Interventions and Capital Controls written by and published by . This book was released on 2014 with total page 173 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three independent essays on sterilized interventions and capital controls. The first essay incorporates sterilized intervention and capital control policies into a standard open economy model and finds that these policies can be welfare improving for a small open economy. With these policies, policymakers take into account how their foreign bond holdings affect relative prices. This allows them to lower output volatility in the economy. The second essay looks at the effects of pegged exchange rates, capital controls and sterilized intervention policies in the context of China. The purpose of this paper is to see how much of China's current account surplus can be explained by government policy during a period in which total factor productivity growth in China was rapid. The model suggests that around half of the movement in China's current account can be explained by a pegged exchange rate and capital control policies. In the absence of these policies China runs a noticeable current account deficit. With these policies China runs a current account surplus, as efforts by policymakers to moderate the appreciation of the nominal exchange rate increases national savings. The final essay looks at the incentives for nations to vary restrictions on capital flows over the business cycle. Results from panel data suggest that countries increase controls on capital inflows in response to an appreciation in the real exchange rate and increased capital inflows. Countries also tend to increase controls on capital outflows during financial crises. However, neither controls on capital inflows or outflows vary with changes in GDP growth. In addition, we also find little evidence that nations vary their use of trade restrictions over the business cycle.

Download or read book Capital Controls Exchange Rates and Monetary Policy in the World Economy written by Sebastian Edwards and published by Cambridge University Press. This book was released on 1997-06-13 with total page 452 pages. Available in PDF, EPUB and Kindle. Book excerpt: The essays collected in this volume discuss the impact of increased capital mobility on macroeconomic performance.

Download or read book Capital Controls In Emerging Economies written by Christine P Ries and published by Routledge. This book was released on 2018-02-23 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Capital Controls and Capital Flows in Emerging Economies written by Sebastian Edwards and published by University of Chicago Press. This book was released on 2009-02-15 with total page 699 pages. Available in PDF, EPUB and Kindle. Book excerpt: Some scholars argue that the free movement of capital across borders enhances welfare; others claim it represents a clear peril, especially for emerging nations. In Capital Controls and Capital Flows in Emerging Economies, an esteemed group of contributors examines both the advantages and the pitfalls of restricting capital mobility in these emerging nations. In the aftermath of the East Asian currency crises of 1997, the authors consider mechanisms that eight countries have used to control capital inflows and evaluate their effectiveness in altering the maturity of the resulting external debt and reducing macroeconomic vulnerability. This volume is essential reading for all those interested in emerging nations and the costs and benefits of restricting international capital flows.

Download or read book Three Essays on International Capital Flows Productivity and Capital Mobility written by Dennis Reinhardt and published by . This book was released on 2011 with total page 173 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Controlling Capital Legal Restrictions and the Asset Composition of International Financial Flows written by Mr.Martin Schindler and published by International Monetary Fund. This book was released on 2009-09-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: How effective are capital account restrictions? We provide new answers based on a novel panel data set of capital controls, disaggregated by asset class and by inflows/outflows, covering 74 countries during 1995-2005. We find the estimated effects of capital controls to vary markedly across the types of capital controls, both by asset categories, by the direction of flows, and across countries' income levels. In particular, both debt and equity controls can substantially reduce outflows, with little effect on capital inflows, but only high-income countries appear able to effectively impose debt (outflow) controls. The results imply that capital controls can affect both the volume and the composition of capital flows.

Download or read book Taming Capital Flows written by J. Stiglitz and published by Springer. This book was released on 2015-05-05 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume contains country experiences explained by policy makers and studies by leading experts on causes and consequences of capital flows as well as policies to control these flows. It addresses portfolio flow issues central to open economies, especially emerging markets.

Download or read book Capital Controls written by Forrest Capie and published by . This book was released on 2002 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Managing Capital Flows and Exchange Rates written by Reuven Glick and published by Cambridge University Press. This book was released on 1998-06-13 with total page 530 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This is a very timely book that brings the reader to the forefront of current research on macroeconomic policy issues in economies subject to sizable capital flows".--Guillermo A. Calvo, University of Maryland.

Download or read book Three Essays on International Economics and Finance written by Juan Antonio Montecino and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the macroeconomic and social impacts of two increasingly common macroeconomic policies: restrictions on international capital mobility -- capital controls -- and so-called unconventional monetary policy -- often referred to as "quantitative easing." The consensus view is that capital controls can effectively lengthen the maturity composition of capital inflows and increase the independence of monetary policy but are not generally effective at reducing net inflows and influencing the real exchange rate. The first essay presents empirical evidence that although capital controls may not directly affect the long-run equilibrium level of the real exchange rate, they may enable disequilibria to persist for an extended period of time relative to the absence of controls. Allowing the speed of adjustment to vary according to the intensity of restrictions on capital flows, it is shown that the real exchange rate converges to its long-run level at significantly slower rates in countries with capital controls. The second essay studies the social welfare implications of capital controls when controls are imperfectly binding and financial markets actively aim to bypass regulation. I consider a series of models of a small open economy featuring a "Dutch disease" externality arising from excessive capital inflows, as well as strategic interactions between a regulatory authority attempting to enforce capital controls and a financial sector attempting to evade them. The models suggest that capital controls, by internalizing externalities associated with capital inflows, can improve welfare relative to a "laissez-faire" benchmark even when these are imperfectly binding. The third and final essay uses data from the Federal Reserve's Tri-Annual Survey of Consumer Finances (SCF) to study the distributional impacts of quantitative easing in the U.S. since the 2008-9 financial crisis. I decompose the change in the distribution of income into three key impact channels of QE policy: 1) the employment channel 2) the asset appreciation and return channel, and 3) the mortgage refinancing channel. The results suggest that while employment changes and mortgage refinancing were equalizing, these impacts were nonetheless swamped by the large dis-equalizing effects of asset appreciations.

Download or read book What s In a Name That Which We Call Capital Controls written by Mr.Atish R. Ghosh and published by International Monetary Fund. This book was released on 2016-02-12 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates why controls on capital inflows have a bad name, and evoke such visceral opposition, by tracing how capital controls have been used and perceived, since the late nineteenth century. While advanced countries often employed capital controls to tame speculative inflows during the last century, we conjecture that several factors undermined their subsequent use as prudential tools. First, it appears that inflow controls became inextricably linked with outflow controls. The latter have typically been more pervasive, more stringent, and more linked to autocratic regimes, failed macroeconomic policies, and financial crisis—inflow controls are thus damned by this “guilt by association.” Second, capital account restrictions often tend to be associated with current account restrictions. As countries aspired to achieve greater trade integration, capital controls came to be viewed as incompatible with free trade. Third, as policy activism of the 1970s gave way to the free market ideology of the 1980s and 1990s, the use of capital controls, even on inflows and for prudential purposes, fell into disrepute.

Download or read book Essays on Exchange Rate Regimes and Financial Account Liberalization written by Raul Razo Garcia and published by . This book was released on 2009 with total page 434 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Portfolio Capital Flows to Emerging Markets written by Hui Miao and published by . This book was released on 1997 with total page 180 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Managing Capital Flows written by Masahiro Kawai and published by Edward Elgar Publishing. This book was released on 2010-01-01 with total page 465 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.

Download or read book Debt Deficits and Exchange Rates written by Helmut Reisen and published by Edward Elgar Publishing. This book was released on 1994 with total page 264 pages. Available in PDF, EPUB and Kindle. Book excerpt: Debt, Deficits and Exchange Rates presents recent work by Helmut Reisen on current international monetary problems in East Asia and Latin America. Written over the last four years, these papers are readily accessible and of immediate policy relevance. The first part is concerned with the debt problems of developing countries, including the growth of domestic public debt, means of hedging a country's debt portfolio against key currency fluctuations, evidence on the debt overhang hypothesis, an evaluation of the Brady Plan, and how to attract foreign direct investment. This is followed by essays on financial opening which discuss the impact of alternative exchange rate regimes during financial integration, the degree of financial openness in Korea and Taiwan, an appropriate strategy for the liberalization of capital flows, and the relationship between financial opening and capital flows. The final part underlines the need for exchange rate management. Issues considered include New Zealand's experience with a pure float, the use of the theory of optimal currency areas to assess whether Asian countries should peg to the Yen, institutional features of macroeconomic management in Asia, and how Latin America should respond to heavy capital flows. Bringing together under one cover a wealth of analysis, comment and argument by a leading international scholar, this volume will be welcomed by students, teachers and policymakers as an important contribution to understanding international monetary problems in the developing world.