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Licensed Unlicensed Requires Authentication Published by De Gruyter November 30, 2019

The Distorting Impact of Capital Controls

  • Makram El-Shagi
From the journal German Economic Review

Abstract

This paper uses panel data to show that capital controls have a significant impact on international interest rate differentials. Various types of controls can be distinguished within the data. The analysis shows that the aforementioned effects of capital controls on interest rates are especially strong in the case of capital import controls on portfolio capital; the implementation of these controls has been suggested in the wake of the Asian Crisis to prevent further crises. The results presented herein contradict the hypothesis that capital controls can achieve a restructuring of the maturity of capital inflows without a distortion in international capital allocation.

Published Online: 2019-11-30
Published in Print: 2012-02-01

© 2019 by Walter de Gruyter Berlin/Boston

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