Colombia’s experience with reserve requirements on capital inflows

Controls on Capital Inflows: Do they Work?∗

This paper analyzes the effectiveness of controls on capital inflows. In particular, we analyze in great detail the Chilean experience with the use of the unremunerated reserve requirement. We examine the effects of the controls applied in Chile in 1991–98 on interest rates, real exchange rate, and the volume and composition of capital inflows. The effects are elusive and it is difficult to pin...

Unbounded Liabilities, Reserve Capital Requirements and the Taxpayer Put Option

When …rms access unbounded liability exposures and are granted limited liability, then an all equity …rm holds a call option, whereby it receives a free option to put losses back to the taxpayers. We call this option the taxpayer put, where the strike is the negative of the level of reserve capital at stake in the …rm. We contribute by (i) valuing this taxpayer put, and (ii) determining the lev...

Capital Inflows in a General Equilibrium Setting

Equilibrium Setting Carlos C. Bautista* A computable general equilibrium (CGE) model is constructed to examine the effects of capital inflows on the sectors of the Philippine economy. The CGE model has five production sectors, two households and two primary inputs. Under a flexible exchange rate regime, it is shown that capital inflows lead to an appreciation of the domestic currency. Nontradab...

Capital inflows and investment in developing countries

What Lures Cross-Border Venture Capital Inflows?

The change in the business model of venture capitalists from investing locally towards investing across borders started to intensify in the late 1990s. According to a dataset of European and NorthAmerican countries, we find that countries with higher expected growth and higher lagged stock market returns receive larger net cross-border venture capital inflows. Thus, portfolio companies located ...