A Comparison between Optimal Capital Controls under Fixed Exchange Rates and Optimal Monetary Policy under Flexible Rates

We apply a Ramsey-type analysis to a standard sticky price, small open economy model, examining the welfare implications of optimal capital controls under fixed exchange rates and optimal monetary policy under flexible exchange rates. We show that capital controls can significantly reduce the gap between the welfare levels under fixed and flexible exchange rates.

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Year of publication:	2014-05
Authors:	Kitano, Shigeto ; Takaku, Kenya
Institutions:	Research Institute for Economics and Business Administration, Kobe University
Subject:	Optimal capital controls \| Optimal monetary policy \| Ramsey policy \| Exchange rate regimes \| Small open economy \| Sticky prices \| Welfare comparison \| Incomplete markets

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Series:	Discussion Paper Series. - ISSN 1345-2207.
Type of publication:	Book / Working Paper
Notes:	Number DP2014-25 16 pages
Classification:	E5 - Monetary Policy, Central Banking and the Supply of Money and Credit ; F4 - Macroeconomic Aspects of International Trade and Finance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011227983