This paper reviews recent theoretical and empirical work on controls over International capital movements. Theoretical contributions reviewed focus on “second-best “ arguments for capital market restrictions, as well as arguments based on multiple equilibria. The empirical literature suggests that controls have been “effective “ in the narrow sense of influencing yield differentials. But there is little evidence that controls have helped governments meet policy objectives, with the exception of reducing the governments’ debt-service costs, and no evidence that controls have enhanced economic welfare in a manner suggested by theory.

Abstract

This paper reviews recent theoretical and empirical work on controls over International capital movements. Theoretical contributions reviewed focus on “second-best “ arguments for capital market restrictions, as well as arguments based on multiple equilibria. The empirical literature suggests that controls have been “effective “ in the narrow sense of influencing yield differentials. But there is little evidence that controls have helped governments meet policy objectives, with the exception of reducing the governments’ debt-service costs, and no evidence that controls have enhanced economic welfare in a manner suggested by theory.

Volume 43 (1996) comprises four issues, as follows:

March, pages 1–260

June, pages 261–460

September, pages 461–638

December, pages 639–841

Authors

Agénor, Pierre-Richard. The Labor Market and Economic Adjustment 261

Bartolini, Leonardo, and Gordon M. Bodnar. Are Exchange Rates Excessively Volatile? And What Does “Excessively Volatile” Mean, Anyway? 72

Bodart, Vincent, and Jean Le Dem. Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Cote d’lvoire 419

Bodnar, Gordon M., and Leonardo Bartolini. Are Exchange Rates Excessively Volatile? And What Does “Excessively Volatile” Mean, Anyway? 72

Buckberg, Elaine, and Alun Thomas. Wage Dispersion in the 1980s: Resurrecting the Role of Trade Through the Effects of Durable Employment Changes 336

Cashin, Paul, and Ratna Sahay. Internal Migration, Center-State Grants, and Economic Growth in the States of India 123

Clark, Peter, Douglas Laxton, and David Rose. Asymmetry in the U.S. Output-Inflation Nexus 216

Cornelius, Peter K., and Beatrice S. Weder. Economic Transformation and Income Distribution: Some Evidence from the Baltic Countries 587

De Masi, Paula, and Vincent Koen. Relative Price Convergence in Russia. 97

Detragiache, Enrica. Rational Liquidity Crises in the Sovereign Debt Market: In Search of a Theory 545

Dooley, Michael P. A Survey of Literature on Controls Over International Capital Transactions 639

Feldman, Robert A, and Vincent Reinhart. Auction Format Matters: Evidence on Bidding Behavior and Seller Revenue 395

Ghura, Dhaneshwar, and Michael T. Hadjimichael. Growth in Sub-Saharan Africa 605

Green, John H. Inflation Targeting: Theory and Policy Implications 779

Hadjimichael, Michael Y, and Dhaneshwar Ghura. Growth in Sub-Saharan Africa 605

Haque, Nadeem Ul, Manmohan S. Kumar. Nelson Murk, and Donald J. Mathieson. The Economic Content of Indicators of Developing Country Creditworthiness 688

Haque, Nadeem Ul, and Ratna Sahay. Do Government Wage Cuts Close Budget Deficits? Costs of Corruption 754

Hoffmaister, Alexander W.. and Carlos A. Vegh. Disinflation and the Re-cession-Now-Versus-Recession-Later Hypothesis: Evidence from Uruguay 355

Jadresic, Esteban. Wage Indexation and the Cost of Disinflation 796

Knight, Malcolm, Norman Loayza, and Delano Villanueva. The Peace Dividend: Military Spending Cuts and Economic Growth 1

Koen, Vincent, and Paula De Masi. Relative Price Convergence in Russia. 97

Kumar, Manmohan S., Nadeem Ul Haque, Nelson Mark, and Donald J. Mathieson. The Economic Content of Indicators of Developing Country Creditworthiness 688

Laxton, Douglas, Peter Clark, and David Rose, Asymmetry in the U. S.

Output-Inflation Nexus 216

Le Dem, Jean, and Vincent Bodart. Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Cote D’lvoire 419

Loayza, Norman, Malcolm Knight, and Delano Villanueva. The Peace Dividend: Military Spending Cuts and Economic Growth 1

MacDonald, Ronald. Long-Run Exchange Rate Modeling: A Reply to Moosa 455

Mark, Nelson, Nadeem Ul Haque, Manmohan S. Kumar, and Donald J. Mathieson. The Economic Content of Indicators of Developing Country Creditworthiness 688

Mathieson, Donald J., Nadeem Ul Haque, Manmohan S. Kumar, and Nelson Mark. The Economic Content of Indicators of Developing Country Creditworthiness 688

McDermott, C. John, and Robert F. Wescott. An Empirical Analysis of Fiscal Adjustments 725

Moosa, Imad A. Long-Run Exchange Rate Modeling: A Comment on MacDonald 452

Ogaki, Masao, Jonathan D. Ostry, and Carmen M. Reinhart. Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison 38

Ostry, Jonathan D., Masao Ogaki, and Carmen M. Reinhart. Saving Behavior in Low-and Middle Income Developing Countries: A Comparison 38

Reinhart, Carmen M., Masao Ogaki, and Jonathan D. Ostry. Saving Behavior in Low-and Middle-Income Developing Countries: A Comparison 38

Reinhart, Vincent, and Robert A. Feldman. Auction Format Matters: Evidence on Bidding Behavior and Seller Revenue 395

Richards, Anthony J. Volatility and Predictability in National Stock Markets: How Do Emerging and Mature Markets Differ? 461

Rose, David. Peter Clark, and Douglas Laxton. Asymmetry in the U.S. Output-Inflation Nexus 216

Sahay, Ratna, and Paul Cashin. International Migration. Center-State Grants, and Economic Growth in the States of India 123

Sahay, Ratna. and Nadeem Ul Haque, Do Government Wage Cuts Close Budget Deficits? Costs of Corruption 754

Santaella. Julio A. Stylized Facts Before IMF-Supported Macroeconomic Adjustment 502

Sarel, Michael. Nonlinear Effects of Inflation on Economic Growth 199

Slemrod. Joel, and Shlomo Yitzhaki. The Costs of Taxation and the Marginal Efficiency Cost of Funds 172

Thomas, Alun, and Elaine Buckberg. Wage Dispersion in the 1980s: Resurrecting the Role of Trade Through the Effects of Durable Employment Chunges 336

Vegh. Carlos A., and Alexander W. Hoffmaister. Disinflation and the Re-cession-Now-Versus-Recession-Later Hypothesis: Evidence from Uruguay 355

Villanueva, Delano, Malcolm Knight, and Norman Loayza. The Peace Dividend: Military Spending Cuts and Economic Growth 1

Weder, Beatrice S., and Peter K. Cornelius. Economic Transformation and Income Distribution: Some Evidence from the Baltic Countries 87

Werner. Alejandro M. Target Zones and Realignment Expectations: The Israeli and Mexican Experiences 571

Wescott, Robert F., and C. John McDermott. An Empirical Analysis of Fiscal Adjustments 725

Yitzhaki, Shlomo, and Joel Slemrod. The Costs of Taxation and the Marginal Efficiency Cost of Funds 172

Titles

Are Exchange Rates Excessively Volatile? And What Does “Excessively Volatile” Mean, Anyway? By Leonardo Bartolini and Gordon M, Bodnar 72

Asymmetry in the U.S. Output-Inflation Nexus. By Peter Clark, Douglas Laxton. and David Rose 216

Auction Formal Matters: Evidence on Bidding Behavior and Seller Revenue. By Robert A. Feldman and Vincent Reinhart 395

The Costs of Taxation and the Marginal Efficiency Cost of Funds, By Joel Slemrod and Shlomo Yitzhaki 172

Disinflation and the Recession-Now-Vcrsus-Reccssion-Later Hypothesis: Evidence from Uruguay. By Alexander W. Hoffmaister and Carlos A. Vegh 355

Do Government Wage Cuts Close Budget Deficits? Costs of Corruption, By Nadeem UI Haque and Ratna Sahay 754

The Economic Content of Indicators of Developing Country Creditworthiness. By Nadeem Ul Haque, Manmohan S. Kumar, Nelson Mark, and Donald J. Mathieson 688

Economic Transformation and Income Distribution: Some Evidence from the Baltic Countries. By Peter K, Cornelius and Beatrice S. Weder 587

An Empirical Analysis of Fiscal Adjustments. By C. John McDermott and Robert F. Wescott 725

Growth in Sub-Saharan Africa. By Dhaneshwar Ghura and Michael T. Hadjimichael 605

Inflation Targeting: Theory and Policy Implications. By John H. Green 779

Internal Migration, Center-State Grants, and Economic Growth in the States of India. By Paul Cashin and Ratna Sahay 123

The Labor Market and Economic Adjustment. By Pierre-Richard Agénor 261

Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Côte d’lvoire. By Vincent Bodart and Jean Le Dem 419

Long-Run Exchange Rate Modeling: A Comment on MacDonald. By Imad A. Moosa 452

Long-Run Exchange Rate Modeling: A Reply to Moosa. By Ronald MacDonald 455

Nonlinear Effects of Inflation on Economic Growth. By Michael Sarel 199

The Peace Dividend: Military Spending Cuts and Economic Growth. By Malcolm Knight. Norman Loayza, and Delano Villanueva 1

Rational Liquidity Crises in the Sovereign Debt Market: In Search of a Theory. By Enrica Detragiaehe 545

Relative Price Convergence in Russia. By Paula De Masi and Vincent Koen 97

Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. By Masao Ogaki, Jonathan D. Ostry, and Carmen M. Reinhart 38

Stylized Facts Before IMF-Supported Macroeconomic Adjustment. By Julio A. Santaella 502

A Survey of Literature on Controls Over International Capital Transactions. By Michael P. Dooley 639

Target Zones and Realignment Expectations: The Israeli and Mexican Experiences. By Alejandro M. Werner 571

Volatility and Predictability in National Stock Markets: How Do Emerging and Mature Markets Differ? By Anthony J. Richards 461

Wage Dispersion in the 1980s: Resurrecting the Role of Trade Through the Effects of Durable Employment Changes. By Elaine Buckberg and Alun Thomas 336

Wage Indexation and the Cost of Disinflation. By Esteban Jadresic 796

Subjects

To facilitate electronic; storage and retrieval of bibliographic data, Staff Papers has adopted the subject classification scheme of the Journal of Economic Literature (Nashville, Tennessee).

C Mathematical and Quantitative Methods

C15 Statistical Simulation Methods; Monte Carlo Methods

Auction Format Matters: Evidence on Bidding Behavior and Seller Revenue. By Robert A. Feldman and Vincent Reinhart 395

C23 Models with Panel Data

Growth in Sub-Saharan Africa. By Dhaneshwar Ghura and Michael T. Hadjimichael 605

C3 Econometric Methods: Multiple/Simultaneous Equation Models

Disinflation and the Recession-Now-Versus-Recession-Later Hypothesis: Evidence from Uruguay. By Alexander W. Hoffmaister and Carlos A. Végh 355

C51 Model Construction and Estimation

Asymmetry in the U.S. Output-Inflation Nexus. By Peter Clark, Douglas Laxton, and David Rose 216

D Microeconomics

D31 Personal Income and Wealth Distribution

Economic Transformation and Income Distribution: Some Evidence from the Baltic Countries. By Peter K. Cornelius and Beatrice S. Weder 587

D44 Auctions

Auction Format Matters: Evidence on Bidding Behavior and Seller Revenue. By Robert A. Feldman and Vincent Reinhart 395

E Macroeconomics and Monetary Economics

E21 Consumption; Saving

Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. By Masao Ogaki, Jonathan D. Ostry, and Carmen M. Reinhart 38

E24 Employment; Unemployment; Wages

The Labor Market and Economic Adjustment. By Pierre-Richard Agenor 261

Wage Indexation and the Cost of Disinflation. By Esteban Jadresic 796

E3 Prices, Business Fluctuations, and Cycles

Disinflation and the Recession-Now-Versus-Recession-Later Hypothesis: Evidence from Uruguay. By Alexander W. Hoffmaister and Carlos A. Végh 355

E31 Price Level; Inflation; Deflation

Asymmetry in the U.S. Output-Inflation Nexus. By Peter Clark, Douglas Laxton, and David Rose 216

Nonlinear Effects of Inflation on Economic Growth. By Michael Sarel 199

Relative Price Convergence in Russia. By Paula De Masi and Vincent Koen 97

Wage Indexation and the Cost of Disinflation. By Esteban Jadresic 796

E44 Financial Markets and the Macroeconomy

Are Exchange Rates Excessively Volatile? And What Does “Excessively Volatile” Mean, Anyway? By Leonardo Banolini and Gordon M. Bodnar 72

E5 Monetary Policy, Central Banking, and the Supply of Money and Credit

Disinflation and the Recession-Now-Versus-Recession-Later Hypothesis: Evidence from Uruguay. By Alexander W. Hoffmaistcr and Carlos A. Végh 355

E52 Monetary Policy (Targets, Instruments, and Effects)

Asymmetry in the U.S. Output-Inflation Nexus. By Peter Clark, Douglas Laxton, and David Rose 216

Inflation Targeting: Theory and Policy Implications. By John H. Green 779

E58 Central Banks and Their Policies

Inflation Targeting: Theory and Policy Implications. By John H. Green 779

E62 Fiscal Policy; Public Expenditures, Investment, and Finance: Taxation

An Empirical Analysis of Fiscal Adjustments. By C. John McDermott and Robert F. Wescott 725

E64 Incomes Policy; Price Policy

Wage Indexation and the Cost of Disinflation. By Esteban Jadresic 796

F International Economics

F31 Foreign Exchange

Are Exchange Rates Excessively Volatile? And What Does “Excessively Volatile” Mean, Anyway? By Leonardo Bartolini and Gordon M. Bodnar 72

F32 Current Account Adjustment; Short Term Capital Movements

Stylized Facts Before IMF-Supported Adjustment. By Julio A, Santaella 502

F33 International Monetary Arrangements and Institutions

Stylized Facts Before IMF-Supported Adjustment. By Julio A. Santaella 502

F34 International Lending and Debt Problems

Rational Liquidity Crises in the Sovereign Debt Market: In Search of a Theory. By Enrica Detragiache 545

Stylized Facts Before IMF-Supported Adjustment. By Julio A. Santaella 502

A Survey of Literature on Controls Over International Capital Transactions. By Michael P. Dooley 639

F4 Macroeconomic Aspects of International Trade and Finance

Target Zones and Realignment Expectations: The Israeli and Mexican Experiences. By Alejandro M. Werner 571

F41 Open Economy Macroeconomics

Rational Liquidity Crises in the Sovereign Debt Market: In Search of a Theory. By Enrica Detragiache 545

Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. By Masao Ogaki. Jonathan D. Ostry. and Carmen M. Reinhart 38

F43 Economic Growth of Open Economies

Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. By Masao Ogaki. Jonathan D. Ostry, and Carmen M, Reinhart 38

G Financial Economics

G12 Asset Pricing

Volatility and Predictability in National Stock Markets: How Do Emerging and Mature Markets Differ? By Anthony J. Richards. 461

G15 International Financial Markets

The Economic Content of Indicators of Developing Country Creditworthiness. By Nadeem Ul Haque, Manmohan S. Kumar. Nelson Mark, and Donald J. Mathieson 688

A Survey of Literature on Controls Over International Capital Transactions. By Michael P. Dooley 639

Volatility and Predictability in National Stock Markets: How Do Emerging and Mature Markets Differ? By Anthony J. Richards. 461

G24 Investment Banking

The Economic Content of Indicators of Developing Country Creditworthiness. By Nadeem Ul Haque, Manmohan S. Kumar. Nelson Mark, and Donald J. Mathieson 688

G28 Government Policy and Regulation

A Survey of Literature on Controls Over International Capital Transactions. By Michael P. Dooley 639

H Public Economics

H1 Structure and Scope of Government

Do Government Wage Cuts Close Budget Deficits? Costs of Corruption. By Nadeem Ul Haque and Ratna Sahay 754

H20 General

The Costs of Taxation and the Marginal Efficiency Cost of Funds. By Joel Slemrod and Shlomo Yitzhaki 172

H21 Efficiency: Optimal Taxation

The Costs of Taxation and the Marginal Efficiency Cost of Funds. By Joel Slemrod and Shlomo Yitzhaki 172

H26 Tax Evasion

The Costs of Taxation and the Marginal Efficiency Cost of Funds. By Joel Slemrod and Shlomo Yitzhaki 172

Do Government Wage Cuts Close Budget Deficits? Costs of Corruption. By Nadeem Ul Haque and Rama Sahay 754

H62 Deficit

An Empirical Analysis of Fiscal Adjustments. By C. John MeDermott and Robert F. Wescott 725

J Labor and Demographic Economics

J21 Labor Force and Employment, Size, and Structure

Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Côte d’lvoire. By Vincent Bodart and Jean Le Dem 419

J23 Employment Determination; Demand for Labor

The Labor Market and Economic Adjustment. By Pierre-Richard Agénor 261

J30 General

Wage Dispersion in the 1980s: Resurrecting the Role of Trade Through the Effects of Durable Employment Changes. By Elaine Buckberg and Alun Thomas 336

J31 Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.

Wage Dispersion in the 1980s: Resurrecting the Role of Trade Through the Effects of Durable Employment Changes. By Elaine Buckberg and Alun Thomas 336

J4 Particular Lahor Markets

Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Côte d’lvoire. By Vincent Bodart and Jean Le Dem 419

J42 Monopsony; Segmented Labor Markets

The Labor Market and Economic Adjustment. By Pierre-Richard Agénor 261

J45 Public Sector Labor Markets

Do Government Wage Cuts Close Budget Deficits? Costs of Corruption. By Nadeem Ul Haque and Ratna Sahay 754

L Industrial Organization

L42 Vertical Restraints; Resale Price Maintenance; Quantity Discounts

Do Government Wage Cuts Close Budget Deficits? Costs of Corruption. By Nadeem UI Haque and Ratna Sahay 754

O Economic Development, Technological Change, and Growth

O11 Macroeconomic Analysis of Economic Development

Growth in Sub-Saharan Africa. By Dhaneshwar Gbura and Michael T. Hadji michael 605

Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. By Masao Ogaki, Jonathan D. Ostry, and Carmen M. Reinhart 38

O16 Financial Markets; Saving and Capital Investment

Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. By Masao Ogaki, Jonathan D. Ostry, and Carmen M. Reinhart 38

O17 Formal and Informal Sectors; Shadow Economy. Institutional Arrangements

Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Côte d’lvoire. By Vincent Bodart and Jean Lc Dem 419

O18 Regional, Urban, and Rural Analysis

Labor Market Representation in Quantitative Macroeconomic Models for Developing Countries: An Application to Côte d’lvoire. By Vincent Bodart and Jean Le Dem 419

O40 General

Growth in Sub-Saharan Africa. By Dhaneshwar Ghura and Michael T. Hadjimichael 605

Nonlinear Effects of Inflation on Economic Growth. By Michael Sare199

O41 One, Two, and Multisector Growth Models

Internal Migration, Center-State Grants, and Economic Growth in the States of India, By Paul Cashin and Ratna Sahay 123

The Peace Dividend: Military Spending Cuts and Economic Growth. By Malcolm Knight, Norman Loayza, and Delano Villanueva 1

O47 Measurement of Economic Growth: Aggregate Productivity

Internal Migration Center-State Grants, and Economic Growth in the States of India. By Paul Cashin and Ratna Sahay 123

The Peace Dividend: Military Spending Cuts and Economic Growth. By Malcolm Knight, Norman Loayza, and Delano Villanueva 1

O53 Asia including Middle East

Internal Migration, Center-State Grants, and Economic Growth in the States of India. By Paul Cashin and Ratna Sahay 123

O55 Africa

Growth in Sub-Saharan Africa. By Dhaneshwar Ghura and Michael T. Hadjimichael 605

O57 Comparative Studies of Countries

Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison. By Masao Ogaki, Jonathan D. Ostry, and Carmen M. Reinhart 38

P Economic Systems

P21 Planning, Coordination, and Reform

Economic Transformation and Income Distribution: Some Evidence from the Baltic Countries, By Peter K. Cornelius and Beatrice S. Weder 587

P22 Prices

Relative Price Convergence in Russia. By Paula De Masi and Vincent Koen 97

P52 Comparative Studies of Particular Economics

The Economic Content of Indicators of Developing Country Creditworthiness. By Nadeem Ul Haque. Manmohan S. Kumar, Nelson Mark, and Donald J. Mathieson 688

R Urban, Rural, and Regional Economics

R11 Analysis of Growth, Development, and Changes

Internal Migration, Center-State Grants, and Economic Growth in the States of India. By Paul Cashin and Ratna Sahay 123

R32 Other Production and Pricing Analysis

Relative Price Convergence in Russia. By Paula De Masi and Vincent Koen 97

In statistical matter throughout this issue,

  • dots (…) indicate that data are not available;

  • a dash (—) indicates that the figure is zero or less than half the final digit shown, or that the item does not exist;

  • a single dot (.) indicates decimals;

  • a comma (,) separates thousands and millions;

  • “billion” means a thousand million, and “trillion” means a thousand billion;

  • a short dash (-) is used between years or months (for example, 1992–94 or January–October) to indicate a total of the years or months inclusive of the beginning and ending years or months;

  • a stroke (/) is used between years (for example, 1993/94) to indicate a fiscal year or a crop year;

  • a colon (:) is used between a year and the number indicating a quarter within that year (for example, 1994:1);

  • components of tables may not add to totals shown because of rounding.