Capital controls lower the variability of the exchange rate and reduce the risk premium as well as the domestic interest rate. On the other hand, capital controls reduce the number of noise traders and, therefore, the risk-bearing capacity of the market, leading to higher interest rates and a...

This paper reexamines the issue of international financial capital mobility, which is today's economic orthodoxy. Discussion is often framed in terms of the impossible trinity. That framing distorts discussion by representing capital mobility as having equal significance with sovereign monetary...

The adoption of the Tobin tax would be an important political act, a break both with the neo-liberal practices which accompany economic globalisation, and with the fatalism which goes along with them. This idea assumes that the level of co-operation which exists between the nations of the world...

Currency market intervention - cum - reserve accumulation has emerged as the favored “self-insurance” strategy in recipient countries of excessive private capital inflows. This paper argues that capital account management represents a less costly alternative line of defense deserving renewed...

Currency market intervention-cum-reserve accumulation has emerged as the favored "selfinsurance" strategy in recipient countries of excessive private capital inflows. This paper argues that capital account management represents a less costly alternative line of defense deserving renewed...

This paper analyzes prudential controls on capital flows to emerging markets from the perspective of a Pigouvian tax that addresses externalities associated with the deleveraging cycle. It presents a model in which restricting capital inflows during boom times reduces the potential outflows...

The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital...

Interest rate differentials between China and the rest of the world provide an attractive target for currency carry trade strategies, but remains problematic due to existing capital controls. We focus on copper holdings as an asset used to facilitate the carry trade. Using a unique dataset of...

Capital controls have been adopted by emerging economies to change the volume and the composition of capital flows and to protect the economy from sudden stops. The effectiveness measured by empirical studies has remained inconclusive, due to the limitation of the available data. This paper...