The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
The relevance of recording and assessing countries' capital flow management measures is
well-recognized, but very few studies have focused on low-income developing countries
(LIDCs). A key constraint is the lack of an appropriate index to measure the openness of
capital account and its change over time. This paper fills the gap by constructing a de jure
index based on information contained in the IMF's Annual Report on Exchange
Arrangements and Exchange Restrictions. It provides an aggregate index to capture the
overall openness of the capital account, and also provides a breakdown of openness for
various subcategories of capital flows. The new database covers 164 countries with
information on 12 types of asset categories over the period 1996-2013. The index provides
the largest coverage of LIDCs among all existing indices and also provides granularity on
openness across asset types, direction of flows and residency. The paper examines the link
between de jure capital account openness with de facto capital flows and outlines potential
applications of this database.