Capital Inflows: The Role of Controls (Entradas de Capital: El Papel de los Controles) (Spanish)

Revista de Economía Institucional, Vol. 12, No. 23, p. 135, 2010

30 Pages Posted: 14 Dec 2010

See all articles by Jonathan D. Ostry

Jonathan D. Ostry

International Monetary Fund (IMF)

Atish R. Ghosh

International Monetary Fund (IMF) - Policy Development and Review Department

Karl Habermeier

International Monetary Fund (IMF)

Marcos Chamon

International Monetary Fund (IMF) - Research Department

Mahvash Saeed Qureshi

International Monetary Fund (IMF) - Research Department

Dennis Reinhardt

Bank of England

Date Written: December 13, 2010

Abstract

This paper analyzes the management of surges in capital inflows to Emerging Markets. It reviews the main policy tools, including fiscal and monetary policy, exchange rate policy, foreign exchange market intervention, domestic prudential regulation, and capital controls. A key conclusion is that, if the economy is operating near potential, if the level of reserves is adequate, if the exchange rate is not undervalued, and if the flows are likely to be transitory, then use of capital controls – in addition to both prudential and macroeconomic policy – is justified as part of the policy toolkit to manage inflows. Evidence from the current crisis suggests that controls aimed at achieving a less risky external liability structure reduced financial fragilities and increased growth resilience.

Note: Downloadable document is in Spanish.

Keywords: Capital Inflows, Capital Controls, Financial Crisis

JEL Classification: F21, F32

Suggested Citation

Ostry, Jonathan D. and Ghosh, Atish R. and Habermeier, Karl and Chamon, Marcos and Qureshi, Mahvash Saeed and Reinhardt, Dennis, Capital Inflows: The Role of Controls (Entradas de Capital: El Papel de los Controles) (Spanish) (December 13, 2010). Revista de Economía Institucional, Vol. 12, No. 23, p. 135, 2010. Available at SSRN: https://ssrn.com/abstract=1724774

Jonathan D. Ostry (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Atish R. Ghosh

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

Karl Habermeier

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Marcos Chamon

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-5867 (Phone)

Mahvash Saeed Qureshi

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Dennis Reinhardt

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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