50 Pages Posted: 8 Mar 2001
Date Written: February 2001
Malaysia recovered from the Asian financial crisis swiftly after the imposition of capital controls in September 1998. The fact that Korea and Thailand recovered in parallel has been interpreted as suggesting that capital controls did not play a significant role in facilitating Malaysia's rebound. However, the financial crisis was deepening in Malaysia in the summer of 1998, while it had significantly eased up in Korea and Thailand. We employ a time-shifted differences-in-differences technique to exploit the differences in the timing of the crises. Compared to IMF programs, we find that the Malaysian policies produced faster economic recovery, smaller declines in employment and real wages, and more rapid turnaround in the stock market.
Suggested Citation: Suggested Citation
Kaplan, Ethan and Rodrik, Dani, Did the Malaysian Capital Controls Work? (February 2001). KSG Working Paper No. 01-008. Available at SSRN: https://ssrn.com/abstract=262173 or http://dx.doi.org/10.2139/ssrn.262173
By Peter Garber
By Haibin Zhu