IMF Working Papers Volume 2014 Issue 008: Effectiveness of Capital Outflow Restrictions (2014)

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Effectiveness of Capital Outflow Restrictions

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Christian Saborowski

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Sarah Sanya

Sarah Sanya
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Hans Weisfeld

Hans Weisfeld
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Juan Yepez

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Series:: IMF Working Papers

Volume/Issue:: Volume 2014: Issue 008

Language:: English

Publication Date:: 21 Jan 2014

DOI:: https://doi.org/10.5089/9781484379752.001

ISBN:: 9781484379752

ISSN:: 1018-5941

Pages:: 34

Keywords:: WP; outflow control index; capital; outflow restriction; Capital flows; Capital controls; Emerging economies; inflow control intensity; flow variable; control tightening; capital flow restriction; interest rate stabilization; outflow control restriction; Capital outflows; Industrial production; Vector autoregression; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2014: Issue 008

Language:: English

Publication Date:: 21 Jan 2014

DOI:: https://doi.org/10.5089/9781484379752.001

ISBN:: 9781484379752

ISSN:: 1018-5941

Pages:: 34

Keywords:: WP; outflow control index; capital; outflow restriction; Capital flows; Capital controls; Emerging economies; inflow control intensity; flow variable; control tightening; capital flow restriction; interest rate stabilization; outflow control restriction; Capital outflows; Industrial production; Vector autoregression; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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This paper examines the effectiveness of capital outflow restrictions in a sample of 37 emerging market economies during the period 1995-2010, using a panel vector autoregression approach with interaction terms. Specifically, it examines whether a tightening of outflow restrictions helps reduce net capital outflows. We find that such tightening is effective if it is supported by strong macroeconomic fundamentals or good institutions, or if existing restrictions are already fairly comprehensive. When none of these three conditions is fulfilled, a tightening of restrictions fails to reduce net outflows as it provokes a sizeable decline in gross inflows, mainly driven by foreign investors.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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