Capital Controls, Collection Costs, and Domestic Public Debt

29 Pages Posted: 29 Dec 2006

See all articles by Joshua Aizenman

Joshua Aizenman

National Bureau of Economic Research (NBER)

Pablo E. Guidotti

Universidad Torcuato Di Tella

Date Written: September 1990

Abstract

The implications of a large public debt for the implementation of capital controls for an economy where tax revenue collection is costly are examined. Conditions are analyzed under which policymakers will resort to capital controls to reduce the cost of recycling domestic public debt. The linkages between a costly tax collection mechanism, capital controls, am domestic government debt are explored in terms of a two-period m:x1el of optimal taxation. Numerical simulations are provided to illustrate haw capital controls are linked to different domestic public debt levels am to different degrees of efficiency in tax-revenue collection.

Suggested Citation

Aizenman, Joshua and Guidotti, Pablo E., Capital Controls, Collection Costs, and Domestic Public Debt (September 1990). NBER Working Paper No. w3443. Available at SSRN: https://ssrn.com/abstract=471482

Joshua Aizenman (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Pablo E. Guidotti

Universidad Torcuato Di Tella

Minones 2159
C1428ATG Buenos Aires, 1428
Argentina

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