The Multiple Effects of Capital Controls

• Authors: Chokri Zehri

Title variants

Wielorakie skutki kontroli przepływu kapitału

• Languages of publication: EN

Abstracts

EN

Capital controls are seen as a means to promote financial stability or improve macroeconomic adjustment in economies with nominal rigidities and suboptimal monetary policy. Such controls may take various forms, including explicit or implicit taxation of cross‑border financial flows and dual or multiple exchange rate systems. Using a quarter dataset on capital controls actions in 27 emerging economies from 2010 to 2018, the study analyzes the effectiveness of capital controls (CCs) along different angles. Since the 2008 financial crisis, strengthening capital controls has allowed more monetary policy autonomy and exchange rate stability, verifying the Mundell‑Fleming trilemma model. Following CCs, the results show that accumulating international reserves may compensate for the loss of inflows and lead to more effective policies. Tighter CCs on inflows cause significant spillovers, specifically in the conditions of liquidity abundance. These spillovers originate from the problem of policy coordination of emerging economies and are mainly caused by capital controls being used as an instrument to manage capital flows. For governments that have to manage the risks associated with inflow surges or disruptive outflows, capital controls need to play a key role.

PL

Kontrola kapitału jest postrzegana jako metoda zapewnienia stabilności finansowej lub poprawy programu dostosowań makroekonomicznych w gospodarkach, w których występują sztywności nominalne i nieoptymalna polityka pieniężna. Taka kontrola może przybierać różne formy, w tym jawnego lub ukrytego opodatkowania transgranicznych przepływów finansowych oraz wprowadzenia systemu podwójnych lub wielokrotnych kursów walutowych. Wykorzystując kwartalne dane dotyczące kontroli kapitału w 27 gospodarkach wschodzących w latach 2010–2018, przeanalizowano skuteczność kontroli kapitału pod różnymi kątami. Od kryzysu finansowego w 2008 r. wzmocnienie kontroli kapitału umożliwiło zwiększenie autonomii polityki pieniężnej i stabilności kursu walutowego, zgodnie z założeniami modelu Mundella‑Fleminga. Wyniki analizy pokazują, że gromadzenie rezerw międzynarodowych może rekompensować utratę wpływów i prowadzić do realizacji bardziej skutecznej polityki. Silniejsza kontrola napływu kapitału powoduje znaczne skutki uboczne, szczególnie w warunkach nadmiernej płynności. Te zewnętrzne efekty wynikają z problemu koordynacji polityki gospodarek wschodzących i są głównie spowodowane przez kontrolę kapitału stosowaną jako instrument zarządzania przepływami kapitału. W działaniach rządów, które muszą zarządzać ryzykiem związanym z gwałtownym napływem lub odpływem kapitału, kontrola kapitału powinna odgrywać kluczową rolę.

Keywords

EN

capital; controls; flows; impacts

PL

kapitał; kontrola; przepływy; skutki; kapitał; kontrola; przepływy; skutki

• Publisher: Uniwersytet Łódzki. Wydawnictwo Uniwersytetu Łódzkiego
• Journal: Comparative Economic Research. Central and Eastern Europe
• Year: 2020
• Volume: 23
• Issue: 4
• Pages: 169-185

Dates

published

2020-12-30

Contributors

author

Chokri Zehri

• Assistant professor of economics, Prince Sattam Bin Abdulaziz University, College of Sciences and Humanities in Al‑Sulail, Department of Business Administration, Al‑Sulail, Saudi Arabia

• https://orcid.org/0000-0003-1420-5384

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Identifiers

DOI

10.18778/1508-2008.23.33