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A Simple Measure of the Intensity of Capital Controls

Hali J. Edison
International Monetary Fund (IMF) - Research Department

Francis E. Warnock
University of Virginia - Darden Business School; National Bureau of Economic Research (NBER)

September 2001

FRB International Finance Discussion Paper No. 708

Abstract:
We present a readily available monthly measure of the intensity of capital controls across 29 emerging market countries that is based on the degree of restrictions on foreign ownership of equities. The initial opening of a market as given by our measure corresponds well with the liberalization dates of Bekaert and Harvey (2000a). In addition, our measure provides information on the extent of the initial opening as well as the evolution of the liberalization over time. After presenting the measure, we compare it to other existing measures of capital controls and briefly describe empirical applications concerning home bias, capital flows to emerging markets, and the effects of financial liberalization on the cost of capital.

Keywords: emerging markets, international financial liberalization, openness, portfolio investment

JEL Classifications: F3, G15

Working Paper Series

Date posted: September 05, 2001 ; Last revised: August 06, 2003

Suggested Citation

Edison, Hali J. and Warnock, Francis E., A Simple Measure of the Intensity of Capital Controls (September 2001). FRB International Finance Discussion Paper No. 708. Available at SSRN: http://ssrn.com/abstract=281801 or doi:10.2139/ssrn.281801

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Contact Information

Francis E. Warnock (Contact Author) University of Virginia - Darden Business School ( email ) P.O. Box 6550 Charlottesville, VA 22906-6550 United States 434-924-6076 (Phone) HOME PAGE: http://faculty.darden.virginia.edu/warnockf/index.htm
National Bureau of Economic Research (NBER) ( email ) 1050 Massachusetts Avenue Cambridge, MA 02138-5398
Hali J. Edison International Monetary Fund (IMF) - Research Department ( email ) 700 19th Street NW Washington, DC 20431 United States 202-623-6946 (Phone) 202-589-6946 (Fax)