Capital Control and Short Term Vulnerability

10 Pages Posted: 28 Oct 2004

See all articles by Ashutosh Kumar

Ashutosh Kumar

Indira Gandhi Institute of Development Research (IGIDR)

Ayan Kumar Pujari

Indira Gandhi Institute of Development Research (IGIDR)

Date Written: January 2005

Abstract

This paper uses Cordella (2003) framework to model an emerging economy and analyzes various situations in the context of capital controls. We conclude that when foreign investors perceive certain country specific risk in an emerging economy, some kind of constraints on capital inflow is desirable. This can help to benefit the investors as well as the country concerned. The example cited in our paper shows that a probable crisis can be avoided with the help of government intervention.

Keywords: Capital control, bank-run, co-operative game

JEL Classification: E58, F34

Suggested Citation

Kumar, Ashutosh and Pujari, Ayan Kumar, Capital Control and Short Term Vulnerability (January 2005). Available at SSRN: https://ssrn.com/abstract=609522 or http://dx.doi.org/10.2139/ssrn.609522

Ashutosh Kumar (Contact Author)

Indira Gandhi Institute of Development Research (IGIDR) ( email )

Gen A.K. Vaidya Marg Santoshnagar
Goregaon (East)
Bombay 400065, Maharashtra
India

HOME PAGE: www.igidr.ac.in/~ashutosh

Ayan Kumar Pujari

Indira Gandhi Institute of Development Research (IGIDR) ( email )

Gen A.K. Vaidya Marg Santoshnagar
Goregaon (East)
Bombay 400065, Maharashtra
India
+91 98 924 27401 (Phone)