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Effectiveness of Capital Controls: Gates versus Walls

Author

Listed:
  • Yang Zhou

    (Institute of Developing Economies, Japan External Trade Organization and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN)

  • Shigeto Kitano

    (Research Institute for Economics and Business Administration (RIEB), Kobe University, JAPAN)

Abstract

This study analyzes the effectiveness of capital controls on international debt flows using data of 81 economies, including both advanced and emerging economies, over the period from 1995 to 2019. The analysis using the total sample shows that, although they are in the expected directions, the impulse responses of capital controls are statistically insignificant. Making various distinctions among samples (such as advanced and emerging economies and pre- and post-crisis periods), we still find that most results are statistically insignificant. However, the canonical distinction between the "gate" and "wall" economies indicates that the effectiveness of capital controls is relevant for the "wall" emerging economies.

Suggested Citation

  • Yang Zhou & Shigeto Kitano, 2022. "Effectiveness of Capital Controls: Gates versus Walls," Discussion Paper Series DP2022-38, Research Institute for Economics & Business Administration, Kobe University, revised Apr 2023.
    • Handle: RePEc:kob:dpaper:dp2022-38
    as

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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2022-38.pdf
    File Function: Revised version, 2023
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Capital flows; Capital controls; Local projection;
    All these keywords.

    JEL classification:

    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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