Too Much of a Good Thing: The Macroeconomic Effects of Taxing Capital Inflows

Posted: 15 Sep 1997

See all articles by Carmen M. Reinhart

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

Date Written: Undated

Abstract

During the 1990s a number of developing countries have introduced a variety of measures designed to curb capital inflows. Many of these measures were either used countercyclically, announced as temporary, or de facto became so because agents found means to circumvent the restrictions. This paper presents a framework that facilitates the analysis of the macroeconomic effects of "temporary" capital controls. The stylized facts of several recent episodes in Asia, Eastern Europe, and Latin America are also examined so as to assess whether these measures achieved some or all of their macroeconomic objectives. We conclude that, in most of these instances, the measures were capable of either reducing the overall volume of inflows, altering their maturity profile, or both over the short run but had little effect on consumption, the current account, or the real exchange rate.

JEL Classification: E61, F33, 011

Suggested Citation

Reinhart, Carmen M., Too Much of a Good Thing: The Macroeconomic Effects of Taxing Capital Inflows (Undated). Available at SSRN: https://ssrn.com/abstract=10785

Carmen M. Reinhart (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
447
PlumX Metrics