Hardback
Capital Controls
The global financial crisis and its aftermath saw boom-bust cycles in cross-border capital flows of astounding magnitude. Issues of capital account liberalization and the imposition of capital controls are back in the headlines, and on researchers’ agendas. This comprehensive and timely volume is the first collection of influential papers by leading scholars in the field that is representative of the various debates on this topic, and illustrative of how thinking and research have evolved.
More Information
Contributors
Contents
More Information
The global financial crisis and its aftermath saw boom-bust cycles in cross-border capital flows of astounding magnitude. Issues of capital account liberalization and the imposition of capital controls are back in the headlines, and on researchers’ agendas. This comprehensive and timely volume is the first collection of influential papers by leading scholars in the field that is representative of the various debates on this topic, and illustrative of how thinking and research have evolved.
Along with an original introduction by the editors, this important book covers many of the themes central to the issue of capital account liberalization, and provides a balanced assessment of the role that capital controls might play in the effective management of capital flows to reap their benefits. Including both seminal papers and recent analytical advances, this book will be an invaluable resource for academics, students of international economics and finance, practitioners, and policymakers.
Along with an original introduction by the editors, this important book covers many of the themes central to the issue of capital account liberalization, and provides a balanced assessment of the role that capital controls might play in the effective management of capital flows to reap their benefits. Including both seminal papers and recent analytical advances, this book will be an invaluable resource for academics, students of international economics and finance, practitioners, and policymakers.
Contributors
46 articles, dating from 1968 to 2012
Contributors include: R. Cooper, S. Edwards, M. Feldstein, H. Grubel, C. Horioka, R. McKinnon, M. Obstfeld, C. Reinhart, A. Stockman, J. Tobin
Contributors include: R. Cooper, S. Edwards, M. Feldstein, H. Grubel, C. Horioka, R. McKinnon, M. Obstfeld, C. Reinhart, A. Stockman, J. Tobin
Contents
Contents:
Acknowledgements
Introduction Jonathan D. Ostry, Atish R. Ghosh and Mahvash S. Qureshi
PART I CAPITAL ACCOUNT LIBERALIZATION: POTENTIAL GAINS
1. Herbert G. Grubel (1968), ‘Internationally Diversified Portfolios: Welfare Gains and Capital Flows’, American Economic Review, 58 (5), December, 1299–314
2. Alan C. Stockman and Alejandro Hernández D. (1988), ‘Exchange Controls, Capital Controls, and International Financial Markets’, American Economic Review, 78 (3), June, 362–74
3. Maurice Obstfeld (1995), ‘Risk-Taking, Global Diversification, and Growth’, American Economic Review, 84 (5), December, 1310–29
4. Vihang Errunza and Etienne Losq (1989), ‘Capital Flow Controls, International Asset Pricing, and Investors’ Welfare: A Multi-Country Framework’, Journal of Finance, 44 (4), September, 1025¬–37
5. Sebastian Edwards and Jonathan D. Ostry (1992), ‘Terms of Trade Disturbances, Real Exchange Rates, and Welfare: The Role of Capital Controls and Labor Market Distortions’, Oxford Economic Papers, 44 (1), January, 20¬–34
6. Harris Dellas and Oded Galor (1992), ‘Growth via External Public Debt and Capital Controls’, International Economic Review, 33 (2), May, 269–81
7. Dani Rodrik and Arvind Subramanian (2009), ‘Why Did Financial Globalization Disappoint?’, IMF Staff Papers, 56 (1), 112–38
8. Pierre-Olivier Gourinchas and Olivier Jeanne (2006), ‘The Elusive Gains from International Financial Integration’, Review of Economic Studies, 73 (3), 715¬–41
9. Dennis P. Quinn and A. Maria Toyoda (2008), ‘Does Capital Account Liberalization Lead to Economic Growth?’, Review of Financial Studies, 21 (3), May, 1403–49
10. Alessandra Bonfiglioli (2008), ‘Financial Integration, Productivity and Capital Accumulation’, Journal of International Economics, 76 (2), December, 337–55
11. Hali J. Edison, Ross Levine, Luca Ricci and Torsten Sløk (2002), ‘International Financial Integration and Economic Growth’, Journal of International Money and Finance, 21 (6), November, 749¬–76
12. Graciela Laura Kaminsky and Sergio L. Schmukler (2008), ‘Short-Run Pain, Long-Run Gain: Financial Liberalization and Stock Market Cycles’, Review of Finance, 12 (2), 253–92
13. M. Ayhan Kose, Eswar E. Prasad and Marco E. Terrones (2009), ‘Does Financial Globalization Promote Risk Sharing?’, Journal of Development Economics, 89 (2), July, 258–70
14. Ross Levine (2001), ‘International Financial Liberalization and Economic Growth’, Review of International Economics, 9 (4), 688–702
15. E. Borensztein, J. De Gregorio and J. Lee (1998), ‘How Does Foreign Direct Investment Affect Economic Growth’, Journal of International Economics, 115–35
16. Brian J. Aitken and Ann E. Harrison (1999), ‘Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela’, American Economic Review, 89 (3), June, 605–18
PART II SEQUENCING OF CAPITAL ACCOUNT LIBERALIZATION
17. Ronald I. McKinnon (1973), ‘The Transition: Exchange-Rate Flexibility and the Role of Foreign Capital’, in Money and Capital in Economic Development, Chapter 11, Washington, DC: Brookings Institution, 150–69
18. Dani Rodrik (1987), ‘Trade and Capital-Account Liberalization in a Keynesian Economy’, Journal of International Economics, 23 (1-2), 113–29
19. Sebastian Edwards and Sweder van Wijnbergen (1986), ‘The Welfare Effects of Trade and Capital Market Liberalization’, International Economic Review, 27 (1), February, 141–8
20. Rod Falvey and Cha Dong Kim (1992), ‘Timing and Sequencing Issues in Trade Liberalisation’, Economic Journal, 102 (413), July, 908¬–24
21. Guillermo A. Calvo (1988), ‘Costly Trade Liberalizations: Durable Goods and Capital Mobility’, IMF Staff Papers, 35 (3), September, 461–73
22. Ronald I. McKinnon and Huw Pill (1997), ‘Credible Economic Liberalizations and Overborrowing’, American Economic Review Papers and Proceedings, 87 (2), May, 189–93
23. Masaya Sakuragawa and Koichi Hamada (2001), ‘Capital Flight, North-South Lending, and Stages of Economic Development’, International Economic Review, 42 (1), February, 1–24
24. Leonardo Bartolini and Allan Drazen (1997), ‘Capital-Account Liberalization as a Signal’, American Economic Review, 87 (1), March, 138–54
25. Vittorio Grilli and Gian Maria Milesi-Ferretti (1995), ‘Economic Effects and Structural Determinants of Capital Controls’, IMF Staff Papers, 42 (3), September, 517–51
PART III ROLE OF CAPITAL CONTROLS TO MANAGE RISKS
26. Richard N. Cooper (1999), ‘Should Capital Controls be Banished?’, Brookings Papers on Economic Activity, 30 (1), 89–125
27. James Tobin (1996), ‘A Currency Transactions Tax, Why and How’, Open Economics Review, 7, July-October, 493–99
28. Olivier Jeanne and Anton Korinek (2010), ‘Excessive Volatility in Capital Flows: A Pigouvian Taxation Approach’, American Economic Review, 100 (2), May, 403–7
29. Jonathan D. Ostry, Atish R. Ghosh, Marcos Chamon and Mahvash S. Quresih (2011), ‘Capital Controls: When and Why?’, IMF Economic Review, 59 (3), 562–80
30. Carmen M. Reinhart and R. Todd Smith (2002), ‘Temporary Controls on Capital Inflows’, Journal of International Economics, 57 (2), August, 327–51
31. Peter Garber and Mark P. Taylor (1995), ‘Sand in the Wheels of Foreign Exchange Markets: A Skeptical Note’, Economic Journal, 105 (428), January, 173–81
32. Michael P. Dooley (1996), ‘Capital Controls and Emerging Markets’, International Journal of Finance and Economics, 1 (3), 197–205
33. Harris Dellas and Alan Stockman (1993), ‘Self-Fulfilling Expectations, Speculative Attack, and Capital Controls’, Journal of Money, Credit and Banking, 25 (4), November, 721–30
34. Daniel Gros (1992), ‘Capital Controls and Foreign Exchange Market Crises in the EMS’, European Economic Review, 36 (8), 1533–44
35. Mihir A. Desai, C. Fritz Foley and James R. Hines Jr. (2006), ‘Capital Controls, Liberalizations, and Foreign Direct Investment’, Review of Financial Studies, 19 (4), Winter, 1433¬–64
PART IV EFFECTIVENESS OF CAPITAL CONTROLS AS A SHORT-RUN POLICY TOOL
36. Sebastian Edwards and Roberto Rigobon (2009), ‘Capital Controls on Inflows, Exchange Rate Volatility and External Vulnerability’, Journal of International Economics, 78 (2), July, 256–67
37. José De Gregorio, Sebastian Edwards and Rodrigo O. Valdés (2000), ‘Controls on Capital Inflows: Do They Work?’, Journal of Development Economics, 63 (1), October, 59–83
38. Eliana Cardoso and Ilan Goldfajn (1998), ‘Capital Flows to Brazil: The Endogeneity of Capital Controls’, IMF Staff Papers, 45 (1), 161–202
39. Kristin J. Forbes (2007), ‘One Cost of the Chilean Capital Controls: Increased Financial Constraints for Smaller Traded Firms’, Journal of International Economics, 71 (2), April, 294–323
40. Jonathan D. Ostry, Atish R. Ghosh, Marcos Chamon and Mahvash S. Qureshi (2012), ‘Tools for Managing Financial-Stability Risks from Capital Inflows’, Journal of International Economics, 88 (2), November, 407–21
41. Hali Edison and Carmen M. Reinhart (2001), ‘Stopping Hot Money’, Journal of Development Economics, 66 (2), December, 533–53
42. Sebastian Edwards (1999), ‘How Effective are Capital Controls?’, Journal of Economic Perspectives, 13 (4), Fall, 65–84
PART V MEASUREMENT OF CAPITAL MOBILITY AND CAPITAL CONTROLS
43. Martin Feldstein and Charles Horioka (1980), ‘Domestic Saving and International Capital Flows’, Economic Journal, 90 (358), June, 314–29
44. Atish R. Ghosh (1995), ‘International Capital Mobility Amongst the Major Industrialised Countries: Too Little or Too Much?’, Economic Journal, 105 (428), January, 107–28 ]
45. Menzie D. Chinn and Hiro Ito (2006), ‘What Matters for Financial Development? Capital Controls, Institutions, and Interactions’, Journal of Development Economics, 81 (1), October, 163–92
Index
Acknowledgements
Introduction Jonathan D. Ostry, Atish R. Ghosh and Mahvash S. Qureshi
PART I CAPITAL ACCOUNT LIBERALIZATION: POTENTIAL GAINS
1. Herbert G. Grubel (1968), ‘Internationally Diversified Portfolios: Welfare Gains and Capital Flows’, American Economic Review, 58 (5), December, 1299–314
2. Alan C. Stockman and Alejandro Hernández D. (1988), ‘Exchange Controls, Capital Controls, and International Financial Markets’, American Economic Review, 78 (3), June, 362–74
3. Maurice Obstfeld (1995), ‘Risk-Taking, Global Diversification, and Growth’, American Economic Review, 84 (5), December, 1310–29
4. Vihang Errunza and Etienne Losq (1989), ‘Capital Flow Controls, International Asset Pricing, and Investors’ Welfare: A Multi-Country Framework’, Journal of Finance, 44 (4), September, 1025¬–37
5. Sebastian Edwards and Jonathan D. Ostry (1992), ‘Terms of Trade Disturbances, Real Exchange Rates, and Welfare: The Role of Capital Controls and Labor Market Distortions’, Oxford Economic Papers, 44 (1), January, 20¬–34
6. Harris Dellas and Oded Galor (1992), ‘Growth via External Public Debt and Capital Controls’, International Economic Review, 33 (2), May, 269–81
7. Dani Rodrik and Arvind Subramanian (2009), ‘Why Did Financial Globalization Disappoint?’, IMF Staff Papers, 56 (1), 112–38
8. Pierre-Olivier Gourinchas and Olivier Jeanne (2006), ‘The Elusive Gains from International Financial Integration’, Review of Economic Studies, 73 (3), 715¬–41
9. Dennis P. Quinn and A. Maria Toyoda (2008), ‘Does Capital Account Liberalization Lead to Economic Growth?’, Review of Financial Studies, 21 (3), May, 1403–49
10. Alessandra Bonfiglioli (2008), ‘Financial Integration, Productivity and Capital Accumulation’, Journal of International Economics, 76 (2), December, 337–55
11. Hali J. Edison, Ross Levine, Luca Ricci and Torsten Sløk (2002), ‘International Financial Integration and Economic Growth’, Journal of International Money and Finance, 21 (6), November, 749¬–76
12. Graciela Laura Kaminsky and Sergio L. Schmukler (2008), ‘Short-Run Pain, Long-Run Gain: Financial Liberalization and Stock Market Cycles’, Review of Finance, 12 (2), 253–92
13. M. Ayhan Kose, Eswar E. Prasad and Marco E. Terrones (2009), ‘Does Financial Globalization Promote Risk Sharing?’, Journal of Development Economics, 89 (2), July, 258–70
14. Ross Levine (2001), ‘International Financial Liberalization and Economic Growth’, Review of International Economics, 9 (4), 688–702
15. E. Borensztein, J. De Gregorio and J. Lee (1998), ‘How Does Foreign Direct Investment Affect Economic Growth’, Journal of International Economics, 115–35
16. Brian J. Aitken and Ann E. Harrison (1999), ‘Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela’, American Economic Review, 89 (3), June, 605–18
PART II SEQUENCING OF CAPITAL ACCOUNT LIBERALIZATION
17. Ronald I. McKinnon (1973), ‘The Transition: Exchange-Rate Flexibility and the Role of Foreign Capital’, in Money and Capital in Economic Development, Chapter 11, Washington, DC: Brookings Institution, 150–69
18. Dani Rodrik (1987), ‘Trade and Capital-Account Liberalization in a Keynesian Economy’, Journal of International Economics, 23 (1-2), 113–29
19. Sebastian Edwards and Sweder van Wijnbergen (1986), ‘The Welfare Effects of Trade and Capital Market Liberalization’, International Economic Review, 27 (1), February, 141–8
20. Rod Falvey and Cha Dong Kim (1992), ‘Timing and Sequencing Issues in Trade Liberalisation’, Economic Journal, 102 (413), July, 908¬–24
21. Guillermo A. Calvo (1988), ‘Costly Trade Liberalizations: Durable Goods and Capital Mobility’, IMF Staff Papers, 35 (3), September, 461–73
22. Ronald I. McKinnon and Huw Pill (1997), ‘Credible Economic Liberalizations and Overborrowing’, American Economic Review Papers and Proceedings, 87 (2), May, 189–93
23. Masaya Sakuragawa and Koichi Hamada (2001), ‘Capital Flight, North-South Lending, and Stages of Economic Development’, International Economic Review, 42 (1), February, 1–24
24. Leonardo Bartolini and Allan Drazen (1997), ‘Capital-Account Liberalization as a Signal’, American Economic Review, 87 (1), March, 138–54
25. Vittorio Grilli and Gian Maria Milesi-Ferretti (1995), ‘Economic Effects and Structural Determinants of Capital Controls’, IMF Staff Papers, 42 (3), September, 517–51
PART III ROLE OF CAPITAL CONTROLS TO MANAGE RISKS
26. Richard N. Cooper (1999), ‘Should Capital Controls be Banished?’, Brookings Papers on Economic Activity, 30 (1), 89–125
27. James Tobin (1996), ‘A Currency Transactions Tax, Why and How’, Open Economics Review, 7, July-October, 493–99
28. Olivier Jeanne and Anton Korinek (2010), ‘Excessive Volatility in Capital Flows: A Pigouvian Taxation Approach’, American Economic Review, 100 (2), May, 403–7
29. Jonathan D. Ostry, Atish R. Ghosh, Marcos Chamon and Mahvash S. Quresih (2011), ‘Capital Controls: When and Why?’, IMF Economic Review, 59 (3), 562–80
30. Carmen M. Reinhart and R. Todd Smith (2002), ‘Temporary Controls on Capital Inflows’, Journal of International Economics, 57 (2), August, 327–51
31. Peter Garber and Mark P. Taylor (1995), ‘Sand in the Wheels of Foreign Exchange Markets: A Skeptical Note’, Economic Journal, 105 (428), January, 173–81
32. Michael P. Dooley (1996), ‘Capital Controls and Emerging Markets’, International Journal of Finance and Economics, 1 (3), 197–205
33. Harris Dellas and Alan Stockman (1993), ‘Self-Fulfilling Expectations, Speculative Attack, and Capital Controls’, Journal of Money, Credit and Banking, 25 (4), November, 721–30
34. Daniel Gros (1992), ‘Capital Controls and Foreign Exchange Market Crises in the EMS’, European Economic Review, 36 (8), 1533–44
35. Mihir A. Desai, C. Fritz Foley and James R. Hines Jr. (2006), ‘Capital Controls, Liberalizations, and Foreign Direct Investment’, Review of Financial Studies, 19 (4), Winter, 1433¬–64
PART IV EFFECTIVENESS OF CAPITAL CONTROLS AS A SHORT-RUN POLICY TOOL
36. Sebastian Edwards and Roberto Rigobon (2009), ‘Capital Controls on Inflows, Exchange Rate Volatility and External Vulnerability’, Journal of International Economics, 78 (2), July, 256–67
37. José De Gregorio, Sebastian Edwards and Rodrigo O. Valdés (2000), ‘Controls on Capital Inflows: Do They Work?’, Journal of Development Economics, 63 (1), October, 59–83
38. Eliana Cardoso and Ilan Goldfajn (1998), ‘Capital Flows to Brazil: The Endogeneity of Capital Controls’, IMF Staff Papers, 45 (1), 161–202
39. Kristin J. Forbes (2007), ‘One Cost of the Chilean Capital Controls: Increased Financial Constraints for Smaller Traded Firms’, Journal of International Economics, 71 (2), April, 294–323
40. Jonathan D. Ostry, Atish R. Ghosh, Marcos Chamon and Mahvash S. Qureshi (2012), ‘Tools for Managing Financial-Stability Risks from Capital Inflows’, Journal of International Economics, 88 (2), November, 407–21
41. Hali Edison and Carmen M. Reinhart (2001), ‘Stopping Hot Money’, Journal of Development Economics, 66 (2), December, 533–53
42. Sebastian Edwards (1999), ‘How Effective are Capital Controls?’, Journal of Economic Perspectives, 13 (4), Fall, 65–84
PART V MEASUREMENT OF CAPITAL MOBILITY AND CAPITAL CONTROLS
43. Martin Feldstein and Charles Horioka (1980), ‘Domestic Saving and International Capital Flows’, Economic Journal, 90 (358), June, 314–29
44. Atish R. Ghosh (1995), ‘International Capital Mobility Amongst the Major Industrialised Countries: Too Little or Too Much?’, Economic Journal, 105 (428), January, 107–28 ]
45. Menzie D. Chinn and Hiro Ito (2006), ‘What Matters for Financial Development? Capital Controls, Institutions, and Interactions’, Journal of Development Economics, 81 (1), October, 163–92
Index
