The Information Content of Capital Controls
Capital controls, policy measures used by governments to regulate cross-country financial flows, have become standard policy options in many emerging market economies. This paper will focus on what capital controls reveal about the state of the eco...
Main Author: | |
---|---|
Format: | Working Paper |
Language: | English |
Published: |
World Bank, Washington, DC
2020
|
Subjects: | |
Online Access: | http://documents.worldbank.org/curated/en/864531596112858742/The-Information-Content-of-Capital-Controls http://hdl.handle.net/10986/34261 |
id |
okr-10986-34261 |
---|---|
recordtype |
oai_dc |
spelling |
okr-10986-342612022-09-20T00:12:48Z The Information Content of Capital Controls Nie, Owen CAPITAL CONTROLS MACROPRUDENTIAL POLICY NOWCASTING FINANCIAL CRISIS CAPITAL FLOWS FINANCIAL FLOWS EMERGING MARKET ECONOMIES FINANCIAL REGULATION Capital controls, policy measures used by governments to regulate cross-country financial flows, have become standard policy options in many emerging market economies. This paper will focus on what capital controls reveal about the state of the economy and the implications of such revelation for policy efficacy. Using a small open economy model with a collateral constraint and over-borrowing relative to the social optimum, I incorporate a representative agent's Bayesian updating of information in response to change in policy and show that the efficacy of capital controls to contain financial crises and improve welfare could be undermined if the agent rationally learns from policy. Empirically, this paper finds that capital controls convey important information market participants use to improve their understanding of fundamentals. This paper highlights the need for policymakers to take into account the un-intended consequences of information revelation in the design of capital ow management policies. 2020-07-30T16:44:31Z 2020-07-30T16:44:31Z 2020-07 Working Paper http://documents.worldbank.org/curated/en/864531596112858742/The-Information-Content-of-Capital-Controls http://hdl.handle.net/10986/34261 English Policy Research Working Paper;9343 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
repository_type |
Digital Repository |
institution_category |
Foreign Institution |
institution |
Digital Repositories |
building |
World Bank Open Knowledge Repository |
collection |
World Bank |
language |
English |
topic |
CAPITAL CONTROLS MACROPRUDENTIAL POLICY NOWCASTING FINANCIAL CRISIS CAPITAL FLOWS FINANCIAL FLOWS EMERGING MARKET ECONOMIES FINANCIAL REGULATION |
spellingShingle |
CAPITAL CONTROLS MACROPRUDENTIAL POLICY NOWCASTING FINANCIAL CRISIS CAPITAL FLOWS FINANCIAL FLOWS EMERGING MARKET ECONOMIES FINANCIAL REGULATION Nie, Owen The Information Content of Capital Controls |
relation |
Policy Research Working Paper;9343 |
description |
Capital controls, policy measures used
by governments to regulate cross-country financial flows,
have become standard policy options in many emerging market
economies. This paper will focus on what capital controls
reveal about the state of the economy and the implications
of such revelation for policy efficacy. Using a small open
economy model with a collateral constraint and
over-borrowing relative to the social optimum, I incorporate
a representative agent's Bayesian updating of
information in response to change in policy and show that
the efficacy of capital controls to contain financial crises
and improve welfare could be undermined if the agent
rationally learns from policy. Empirically, this paper finds
that capital controls convey important information market
participants use to improve their understanding of
fundamentals. This paper highlights the need for
policymakers to take into account the un-intended
consequences of information revelation in the design of
capital ow management policies. |
format |
Working Paper |
author |
Nie, Owen |
author_facet |
Nie, Owen |
author_sort |
Nie, Owen |
title |
The Information Content of Capital Controls |
title_short |
The Information Content of Capital Controls |
title_full |
The Information Content of Capital Controls |
title_fullStr |
The Information Content of Capital Controls |
title_full_unstemmed |
The Information Content of Capital Controls |
title_sort |
information content of capital controls |
publisher |
World Bank, Washington, DC |
publishDate |
2020 |
url |
http://documents.worldbank.org/curated/en/864531596112858742/The-Information-Content-of-Capital-Controls http://hdl.handle.net/10986/34261 |
_version_ |
1764480525194493952 |