Why Do Countries Use Capital Controls?

37 Pages Posted: 15 Feb 2006

See all articles by R. Barry Johnston

R. Barry Johnston

International Monetary Fund (IMF)

Natalia T. Tamirisa

International Monetary Fund (IMF)

Date Written: December 1998

Abstract

Recourse to controls on capital flows among developing economies is generally quite pervasive. This paper examines the structure and determinants of capital controls based on a cross-sectional study of developing and transition economies. It identifies categories of capital transactions that can be aggregated for analytical purposes. Controls are found to be related to the balance of payments, macroeconomic management, market and institutional evolution, prudential and other factors. The relationship with the balance of payments, however, is not robust to simultaneous equation analysis.

Keywords: capital controls, development

JEL Classification: F21, F32, O16

Suggested Citation

Johnston, R. Barry and Tamirisa, Natalia T., Why Do Countries Use Capital Controls? (December 1998). IMF Working Paper, Vol. , pp. 1-37, 1998. Available at SSRN: https://ssrn.com/abstract=883936

R. Barry Johnston (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Natalia T. Tamirisa

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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