The Effectiveness of Macroprudential Policies and Capital Controls Against Volatile 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...

Effectiveness and Effects of China’s Capital Controls

Reductions in barriers to global trade have not been accompanied by a widespread loosening of restrictions on international flows of capital, especially in China. This study shows that China has some of the most restrictive controls and uses them effectively to bias flows of cross border capital heavily in favor of foreign direct investment and limit flows of portfolio and bank assets and liabi...

Do controls on capital inflows insulate domestic variables against external shocks ?

for help with data. The financial support of the Cambridge Political Economy Society and CAPES (Brazilian Ministry for Education) is acknowledged. The usual caveats apply.

Macroprudential capital requirements and systemic risk

In the aftermath of the financial crisis, there is interest in reforming bank regulation such that capital requirements are more closely linked to a bank’s contribution to the overall risk of the financial system. In our paper we compare alternative mechanisms for allocating the overall risk of a banking system to its member banks. We explicitly take into account that overall risk as well as ea...

Capital inflows and investment in developing countries