Effectiveness of Capital Outflow Restrictions
IMF Working Papers, January 21, 2014
Source details
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- Effectiveness of Capital Outflow Restrictions
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Bibliographic details
- Authors: Christian Saborowski, Sarah Sanya, Hans Weisfeld, Juan Yepez
- Published: January 21, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484379752.001
Sample and methodology
- Sample: 37 emerging market economies during the period 1995-2010.
- Method: panel vector autoregression approach with interaction terms.
- Research question: whether a tightening of outflow restrictions helps reduce net capital outflows.
Key findings
- A tightening of outflow restrictions is effective at reducing net capital outflows if at least one of the following conditions holds:
- strong macroeconomic fundamentals;
- good institutions;
- existing restrictions are already fairly comprehensive.
- When none of the three conditions is fulfilled, a tightening of restrictions fails to reduce net outflows and instead provokes a sizeable decline in gross inflows.
- The decline in gross inflows is mainly driven by foreign investors.
Subject areas and keywords
- Subject: Balance of payments, Capital controls, Capital flows, Capital outflows, Econometric analysis, Industrial production, Production, Vector autoregression
- Keywords: capital, Capital controls, capital flow restriction, Capital flows, Capital outflows, control tightening, Emerging economies, flow variable, Global, Industrial production, inflow control intensity, interest rate stabilization, outflow control index, outflow control restriction, outflow restriction, Vector autoregression, WP