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Capital Account Policies in Emerging Asian Economies: Are They Effective in the 2000s?

Author

Listed:
  • Jongwanich, Juthathip

    (Thammasat University)

Abstract

This paper examines the effectiveness of capital account policy in terms of its ability to affect the volume and composition of capital flows, relieve pressures on real exchange rates, and foster monetary policy independence. Ten emerging Asian economies are used as case studies to assess the effectiveness of capital account policy during 2000–2015. The results suggest that some types of capital controls are effective in reducing the volume of capital flows and pressure on real exchange rates. The choice of exchange rate regime matters in terms of the effectiveness of capital controls for fostering monetary policy independence. Although some types of capital controls are effective in creating macroeconomic stability, implementing capital account policy needs to be undertaken with caution. This is because substitution or complementarity among capital controls is evident, both within and across countries in the region. It seems that strong economic fundamentals are more important than capital account policy for changing the composition of capital inflows toward more stable and long-term flows.

Suggested Citation

  • Jongwanich, Juthathip, 2019. "Capital Account Policies in Emerging Asian Economies: Are They Effective in the 2000s?," ADB Economics Working Paper Series 578, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0578
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    File URL: https://www.adb.org/sites/default/files/publication/499191/ewp-578-capital-account-policies-emerging-asia.pdf
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    References listed on IDEAS

    as
    1. Cesar Rodrigues van der Laan & André Moreira Cunha & Marcos Tadeu Caputi Lélis, 2017. "On the effectiveness of capital controls during the Great Recession: The Brazilian experience (2007–2013)," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 40(2), pages 203-222, April.
    2. Natalia T. Tamirisa, 1999. "Exchange and Capital Controls as Barriers to Trade," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 1-4.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    capital flows; capital restrictions; emerging Asia;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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