The resumption of capital flows to developing countries in the nineties is intertwined in the Brazilian case with the attempts to achieve inflation stabilization. A very restrictive monetary policy has, since the last Quarter of 1991, offered probably the world's highest yield to fixed income...

We analyze the Brazilian experience in the 1990s to access the effectiveness of controls on capital inflows in restricting financial inflows and changing their composition towards long term flows. Econometric exercises (VARs) lead us to conclude that controls on capital inflows were effective in...