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Bulletin of Monetary Economics and Banking

Document Type

Call for Paper

Abstract

This study tries to undertake a critical review of the spillover effects of capital controls and their welfare implications. We provide a synthesis of the literature on both the theoretical and empirical literature on the spillover effects of capital controls. Furthermore, the role of similar economies (geographical region, and economic characteristics), direction-specific capital controls, global financial crisis (GFC), asset-specific capital controls and the compositional effect of capital flows are discussed to explore the degree and extent of spillover effects of capital controls policy. Similarly, the welfare implications of capital controls depend on the policy motive behind the imposition of capital controls, the state of coordination between the source and destination countries, and among the destination countries. Our study indicates that the imposition of capital controls should be flexible, competitive or prudential and should take into account domestic conditions and circumstances. Also, there is a need for complementarity between conventional macroeconomic policies and capital control actions, and multilateral coordination between source and capital-receiving countries. Finally, we propose a future research agenda for this issue.

First Page

7

Last Page

44

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

India

Affiliation

Indian Institute of Technology, Hyderabad, India

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