Are capital controls and macroprudential measures desirable in an emerging economy? How do these instruments interact with monetary policy? I address these questions in a DSGE model for an emerging economy whose banks are indebted in foreign currency. The model is augmented with financial...

A DSGE model is developed to study the interaction between capital controls, macroprudential measures and monetary policy in an emerging economy. The main results are as follows. First, capital controls and macroprudential policies are able to mitigate the adverse effects of an increase in the...

In the last decade, some emerging economies have imposed capital controls to reduce the volatility of capital flows and to manage the exchange rate. However, a capital controls tightening in some countries is likely to deflect capital flows to other countries with no controls in place. In this...

I built a three-country business cycle model with one AE and two EMEs to analyze the spillover effects arising from capital controls. I find that, following a push-factor shock from the AE, if one EME tightens capital controls, the other EME experiences an additional wave of foreign investments....

Large swings in cross-border capital flows can have consequences for domestic stability and open a channel for the transmission of shocks and spillovers across economies, including the euro area. Against this backdrop, the present paper reviews new evidence for the effectiveness of capital flow...

This paper studies the sudden stop in capital flows that emerging markets experienced throughout the first months of the pandemic. First, we find that the sudden stop in capital flows was strongly affected by lower portfolio investments by non-bank financial intermediaries: for many emerging...

The goal of this work is a systematic analysis of the effectiveness of capital controls in reducing the volume of capital flows and the probability of extreme events (surges and flights), strengthening financial stability and affecting the exchange rate. We find that controls significantly...