Are Price-Based Capital Account Regulations Effective in Developing Countries?

The author evaluates the effectiveness of policy measures adopted by Chile and Colombia, aiming to mitigate the deleterious effects of pro-cyclical capital flows. In the case of Chile, according to his Generalized Method of Moments (GMM) analysis, capital controls succeeded in reducing net short-term capital flows but did not affect long-term flows. As far as Colombia is concerned, the regulations were capable of affecting total flows and also long-term ones. In addition, the co-integration models indicate that the regulations did not have a direct effect on the real exchange rate in the Chilean case. Nonetheless, the model used for Colombia did detect a direct impact of the capital controls on the real exchange rate. Therefore, the results do not seem to support the idea that those regulations were easily evaded.

Bibliographic Details

Main Author:	David, Antonio C.
Language:	English
Published:	World Bank, Washington, DC 2007-03
Subjects:	ACCELERATOR, ADMINISTRATIVE CAPITAL, ARBITRAGE, ASYMMETRIC INFORMATION, BALANCE OF PAYMENTS, BALANCE SHEETS, BANK LOANS, BANKRUPTCY, BOUNDED RATIONALITY, BUSINESS CYCLE, CAPITAL ACCOUNT, CAPITAL ACCOUNT CONVERTIBILITY, CAPITAL ACCOUNT POLICIES, CAPITAL ACCOUNT RESTRICTIONS, CAPITAL CONTROLS, CAPITAL FLOW, CAPITAL FLOW REVERSALS, CAPITAL FLOWS, CAPITAL GAINS, CAPITAL INFLOW, CAPITAL INFLOWS, CAPITAL MARKETS, CAPITAL OUTFLOWS, CENTRAL BANK, CENTRAL BANKS, COMMERCIAL BANKS, COMPARATIVE ANALYSIS, COUNTRY RISK, CURRENCY CRISES, CURRENCY RISK, CURRENT EXCHANGE RATE, CYCLICAL COMPONENT, DEPOSIT REQUIREMENT, DEPOSIT REQUIREMENTS, DEPOSITS, DEVELOPING COUNTRIES, DOMESTIC INTEREST RATE, DOMESTIC INTEREST RATES, DOMESTIC PRICES, ECONOMETRIC ANALYSIS, ECONOMETRICS, ECONOMIC ACTIVITY, ELASTICITY, EMERGING ECONOMIES, EMERGING MARKETS, EMPIRICAL EVIDENCE, ENDOGENOUS VARIABLES, EXCHANGE RATE DEPRECIATION, EXCHANGE RATE REGIME, EXOGENOUS VARIABLES, EXTERNAL DEBT, EXTERNAL ENVIRONMENT, EXTERNAL SHOCKS, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIARIES, FINANCIAL LIBERALIZATION, FINANCIAL MARKET, FINANCIAL STATEMENTS, FINANCIAL VOLATILITY, FOREIGN ASSETS, FOREIGN CURRENCY, FOREIGN CURRENCY DEBT, FOREIGN EXCHANGE, FOREIGN INTEREST RATE, FOREIGN INTEREST RATES, FOREIGN INVESTOR, GDP, GOVERNMENT EXPENDITURES, GOVERNMENT SPENDING, HIGH INTEREST RATES, HIGH RESERVE REQUIREMENTS, INTEREST RATE, INTEREST RATE DIFFERENTIALS, INTEREST RATES, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL FLOWS, INTERNATIONAL CAPITAL MARKETS, LIBERALIZATION OF CAPITAL, LIQUIDITY, LONG TERM, MACROECONOMIC EFFECTS, MACROECONOMIC ENVIRONMENT, MACROECONOMIC PERFORMANCE, MACROECONOMIC POLICY, MACROECONOMIC VOLATILITY, MACROECONOMICS, MONETARY POLICY, MORAL HAZARD, NET CAPITAL, NET CAPITAL FLOWS, NET FLOWS, NET FOREIGN ASSETS, OPPORTUNITY COST, PENSION FUNDS, POLICY RESEARCH, PRIVATE CAPITAL, PRIVATE CAPITAL FLOWS, PRIVATE SECTOR, REAL EXCHANGE, REAL EXCHANGE RATE, REAL EXCHANGE RATE APPRECIATION, REAL EXCHANGE RATE OVERVALUATION, REAL EXCHANGE RATES, RESERVE, RESERVE REQUIREMENT, RESERVE REQUIREMENTS, RETURN DIFFERENTIALS, RISK PREMIUM, SHORT-TERM CAPITAL, SHORT-TERM CAPITAL INFLOWS, TRADE BALANCE,
Online Access:	http://documents.worldbank.org/curated/en/2007/03/7471923/price-based-capital-account-regulations-effective-developing-countries https://hdl.handle.net/10986/7208
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