Does Capital Controls Stop the extreme movements of International Capital flows?
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| Title | Does Capital Controls Stop the extreme movements of International Capital flows?
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| Author | Liu Liya, Cheng Tianxiao and Guan Yizhong |
| Organization | Shanghai University of Finance and Economic, School of Finance |
| Email | liuliya@mail.shufe.edu.cn；tianxiao_cheng@163.com |
| Key Words | Capital Control; International Capital Flows; Extreme Movements |
| Abstract | IMF proposes the policy framework of capital control under the ground of abnormal international capital flow waves. The paper distinguish the extreme international capital flows into 4 kinds of state which are “surge”, “stop”, “flight” and “retrenchment”. Surge and stop are driven by foreign investors, while flight and retrenchment are driven by domestic investors. The paper use the gross international capital flow data but the net flow data to study the effect of capital control policy on stopping the extreme movements of international capital flows theoretically and empirically, because the net flow data would offset the volatility of international capital flows. The paper finds that the effect of capital controls is limited, which only decrease the probability of “flight” and “stop”, but cannot stop the “surge” and “stop”, so capital control have no effects on foreign investors. |
| Serial Number | WP383 |
| Time | 2012-09-27 |
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