Costinot, Arnaud; Lorenzoni, Guido; Werning, Iván - In: Journal of Political Economy 122 (2014) 1, pp. 77-77
We develop a theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite-horizon endowment … incentives to promote domestic savings by taxing capital inflows or subsidizing capital outflows. Although our theory of capital … controls emphasizes interest rate manipulation, the pattern of borrowing and lending, per se, is irrelevant. …