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Controls on capital inflows and external shocks

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  • David, Antonio C.

Abstract

The author attempts to analyze whether price-based controls on capital inflows are successful in insulating economies against external shocks. He presents results from vector auto regressive (VAR) models that indicate that Chile and Colombia, countries that adopted controls on capital inflows, seem to have been relatively well insulated against external disturbances. Subsequently, he uses the auto regressive distributed lag (ARDL) approach to co-integrationto isolate the effects of the capital controls on the pass-through of external disturbances to domestic interest rates in those economies. The author concludes that there is evidence that the capital controls allowed for greater policy autonomy.

Suggested Citation

  • David, Antonio C., 2007. "Controls on capital inflows and external shocks," Policy Research Working Paper Series 4176, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4176
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    References listed on IDEAS

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    Cited by:

    1. Liao, Jia & Meng, Jie & Ren, Junfan & Zhang, Lin, 2024. "The impact of capital Inflow's features on the effectiveness of capital controls - Evidence from multinational data," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 273-284.
    2. David, Antonio C., 2007. "Revisiting Price-based Controls on Capital Inflows in a "Sophisticated" Emerging Market," World Development, Elsevier, vol. 35(8), pages 1329-1340, August.
    3. Moritz Cruz & Bernard Walters, 2008. "Is the accumulation of international reserves good for development?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 665-681, September.

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    Keywords

    Macroeconomic Management; Economic Theory&Research; Economic Stabilization; Capital Flows; Financial Economics;
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