Capital controls can take many different forms and are broadly defined as any restrictions on the movement of capital across a country’s borders. This article focuses on the debate on the merits of capital controls for emerging markets and developing economies. It describes the potential costs and benefits of capital controls, focusing on the recent empirical literature evaluating the impact of capital controls.
KeywordsBretton Woods system Bubbles Capital account liberalization Capital controls Distortions Dutch disease encaje (Chile) Fixed exchange rates Foreign direct investment International monetary fund Keynes, J. M. Kindleberger, C. Monetary policy Nurkse, R. Portfolio investment Risk diversification
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