Are Price-Based Capital Account Regulations Effective in Developing Countries?
The author evaluates the effectiveness of policy measures adopted by Chile and Colombia, aiming to mitigate the deleterious effects of pro-cyclical capital flows. In the case of Chile, according to his Generalized Method of Moments (GMM) analysis,...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/03/7471923/price-based-capital-account-regulations-effective-developing-countries http://hdl.handle.net/10986/7208 |
| Summary: | The author evaluates the effectiveness
of policy measures adopted by Chile and Colombia, aiming to
mitigate the deleterious effects of pro-cyclical capital
flows. In the case of Chile, according to his Generalized
Method of Moments (GMM) analysis, capital controls succeeded
in reducing net short-term capital flows but did not affect
long-term flows. As far as Colombia is concerned, the
regulations were capable of affecting total flows and also
long-term ones. In addition, the co-integration models
indicate that the regulations did not have a direct effect
on the real exchange rate in the Chilean case. Nonetheless,
the model used for Colombia did detect a direct impact of
the capital controls on the real exchange rate. Therefore,
the results do not seem to support the idea that those
regulations were easily evaded. |
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