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Capital Controls and Capital Flows in Emerging EconomiesPolicies, Practices, and Consequences$
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Sebastian Edwards

Print publication date: 2007

Print ISBN-13: 9780226184975

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226184999.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 29 June 2022

Capital Controls

Capital Controls

An Evaluation

(p.645) 14 Capital Controls
Capital Controls and Capital Flows in Emerging Economies

Nicolas Magud

Carmen M. Reinhart

University of Chicago Press

This chapter investigates the literature on capital controls and economic performance. It presents evidence on episodes with capital controls that are not as well known as those of Chile and Malaysia. Capital controls on inflows appear to make monetary policy more independent, alter the composition of capital flows, and decrease real exchange rate pressures. These capital controls do not reduce the volume of net flows, and, hence, the current account balance. Chile emerges as the most successful example of capital controls on inflows. As long as capital flows to emerging markets remain volatile and potentially disruptive, the discussion of capital controls in academic and policy circles will remain alive, and hence there is a real need to evaluate their effectiveness, however defined.

Keywords:   capital controls, economic performance, Chile, Malaysia, monetary policy, inflows, exchange rate, net flows, account balance

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