A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation
We develop a theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite-horizon endowment economy with two countries. One country chooses taxes on international capital flows in order to maximize the welfare of its representative agent, while the other country is passive. We show that a country growing faster than the rest of the world has 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.
Year of publication: |
2014
|
---|---|
Authors: | Costinot, Arnaud ; Lorenzoni, Guido ; Werning, Iván |
Published in: |
Journal of Political Economy. - University of Chicago Press. - Vol. 122.2014, 1, p. 77-77
|
Publisher: |
University of Chicago Press |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation
Werning, Iván, (2011)
-
A THEORY OF CAPITAL CONTROLS AS DYNAMIC TERMS-OF-TRADE MANIPULATION
Costinot, Arnaud, (2011)
-
A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation
Costinot, Arnaud, (2011)
- More ...