Exchange and Capital Controls as Barriers to Trade
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Summary:
This paper considers the effect of exchange and capital controls on trade in the gravity-equation framework, in which bilateral exports depend on the distance between countries, the countries’ size and wealth, tariff barriers, and exchange and capital controls. The extent of exchange and capital controls is measured by unique indices. In view of the degree to which countries have liberalized their exchange systems, controls on current payments and transfers are found to be a minor impediment to trade, while capital controls significantly reduce exports into developing and transition economies. Thus, further capital account liberalization could significantly foster trade.
Series:
Working Paper No. 1998/081
Subject:
Balance of payments Capital controls Exchange restrictions Exports Foreign exchange International trade Tariffs Taxes Trade barriers
Notes:
Also published in Staff Papers, Vol. 46, No. 1, March 1999.
English
Publication Date:
June 1, 1998
ISBN/ISSN:
9781451955194/1018-5941
Stock No:
WPIEA0811998
Pages:
19
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