Keywords
Capital account liberalization
Capital controls
Macroprudential policies
Financial crises
How to Cite
Abstract
The view of the International Monetary Fund (IMF) on capital account liberalization and capital controls has undergone important reassessments over the past two and a half decades. Several financial crises, including the 2007-2008 global financial one (GFC), propelled it to partially defend the use of capital controls to eliminate certain dysfunctions, such as financial risks and pressures on exchange rate appreciation. Our study shows that this reorientation in the scope of IMF articles also configured a response to empirical studies that pointed to flaws in orthodox theory about capital account liberalization and those that investigated the effectiveness of capital controls in emerging economies in the post-global financial crisis period. However, we are yet to find no explicit defense in favor of the use of capital controls and the permanent management of exchange rates, despite relevant empirical evidence indicating the effectiveness of these measures.
References
AIZENMAN, J.; BINICI, M. Exchange market pressure in OECD and emerging economies: domestic vs. external factors and capital flows in the old and new normal. Journal of International Money and Finance, v. 66, p. 65-87, 2016.
ANDRADE, R. P.; PRATES, D. M. Exchange rate dynamics in a peripheral monetary economy. Journal of Post Keynesian Economics, v. 35, n. 3, p. 399-416, 2013.
ARORA, V. B.; CERISOLA, M. D. How does US monetary policy influence economic conditions in emerging markets? Washington, DC: International Monetary Fund, 2000. (IMF Working Paper, WP/00/148).
BINICI, M.; HUTCHISON, M.; SCHINDLER, M. Controlling capital? Legal restrictions and the asset composition of international financial flows. Journal of International Money and Finance, v. 29, n. 4, p. 666-684, 2010.
BLANCHARD, O.; DELL’ARICCIA, G.; MAURO, P. Rethinking macroeconomic policy. Journal of Money, Credit and Banking, v. 42, p. 199-215, 2010.
BLANCHARD, O.; OSTRY, J. D.; GHOSH, A. R.; CHAMON, M. Are capital inflows expansionary or contractionary? Theory, policy implications, and some evidence. IMF Economic Review, v. 65, n. 3, p. 563-585, 2017.
BLUEDORN, J.; DUTTAGUPTA, R.; GUAJARDO, J.; TOPALOVA, P. Capital flows are fickle: Anytime, anywhere. Washington, DC: International Monetary Fund, 2013. (IMF Working Paper, WP/13/183).
CALVO, G. A.; IZQUIERDO, A.; MEJIA, L. F. On the empirics of sudden stops: the relevance of balance-sheet effects. Cambridge, MA: National Bureau of Economic Research, 2004. (NBER Working Paper, n. w10520).
CALVO, G. A.; REINHART, C. M. Fear of floating. The Quarterly Journal of Economics, v. 117, n. 2, p. 379-408, 2002.
CALDERÓN, C.; LEVY-YEYATI, E. Zooming in: From aggregate volatility to income distribution. Washington, DC: The World Bank, 2009. (World Bank Working Paper, WPS4895).
CARDARELLI, R.; ELEKDAG, S.; KOSE, M. A. Capital inflows: Macroeconomic implications and policy responses. Washington, DC: International Monetary Fund, 2009. (IMF Working Paper, WP/09/40).
CONTI, B. M. D.; PRATES, D. M.; PLIHON, D. A hierarquia monetária e suas implicações para as taxas de câmbio e de juros e a política econômica dos países periféricos. Economia e Sociedade, Campinas, v. 23, n. 2, p. 341-372, 2014.
DEMIRGÜÇ-KUNT, A.; DETRAGIACHE, E. The determinants of banking crises in developing and developed countries. IMF Staff Papers, v. 45, n. 1, p. 81-109, 1998.
EDWARDS, S. Capital controls, sudden stops, and current account reversals. In: EDWARDS, S. (Ed.). Capital controls and capital flows in emerging economies: policies, practices and consequences. Chicago, IL: University of Chicago Press, 2007. p. 73-113.
EICHENGREEN, B.; HAUSMANN, R. Currency mismatches, debt intolerance and original sin: why they are not the same and why it matters. In: EDWARDS, S. (Ed.). Capital controls and capital flows in emerging economies: policies, practices and consequences. Chicago, IL: University of Chicago Press, 2007. p. 121-164.
EICHENGREEN, B.; HAUSMANN, R.; PANIZZA, U. The pain of original sin. In: EICHENGREEN, B.; HAUSMANN, R. (Ed.). Other people’s money: debt denomination and financial instability in emerging-market economies. Chicago, IL: University of Chicago Press, 2003. p. 13-61.
FERNÁNDEZ, A.; KLEIN, M. W.; REBUCCI, A.; SCHINDLER, M.; URIBE, M. Capital control measures: a new dataset. IMF Economic Review, v. 64, n. 3, p. 548-574, 2016.
FISCHER, S. Capital account liberalization and the role of the IMF. In: IMF Seminar Asia and the IMF, Hong Kong, v. 19, 1997.
FORBES, K.; FRATZSCHER, M.; KOSTKA, T.; STRAUB, R. Bubble thy neighbor: portfolio effects and externalities from capital controls. Journal of International Economics, v. 99, p. 85-104, 2016.
FRITZ, B.; de PAULA, L. F.; PRATES, D. M. Global currency hierarchy and national policy space: a framework for peripheral economies. European Journal of Economics and Economic Policies: Intervention, v. 15, n. 2, p. 208-218, 2018.
FRITZ, B.; PRATES, D. The new IMF approach to capital account management and its blind spots: lessons from Brazil and South Korea. International Review of Applied Economics, v. 28, n. 2, p. 210-239, 2014.
FURCERI, D.; LOUNGANI, P. Capital account liberalization and inequality Washington, DC: International Monetary Fund, 2015. (IMF Working Paper, WP/15/243).
GHOSH, M. A. R.; QURESHI, M. S.; SUGAWARA, N. Regulating capital flows at both ends: does it work? Washington, DC: International Monetary Fund, 2014. (IMF Working Paper, WP/14/188).
HABERMEIER, K.; KOKENYE, A.; BABA, C. The effectiveness of capital controls and prudential policies in managing large inflows Washington, DC: International Monetary Fund, 2011. (IMF Staff Discussion Note, SDN/11/14).
INTERNATIONAL MONETARY FUND. Reaping the benefits of financial globalization Washington, DC: International Monetary Fund, 2007.
INTERNATIONAL MONETARY FUND. Recent experiences in managing capital inflows – cross-cutting themes and possible policy framework Washington, DC: International Monetary Fund, 2011a.
INTERNATIONAL MONETARY FUND. The multilateral aspects of policies affecting capital flows Washington, DC: International Monetary Fund, 2011b.
INTERNATIONAL MONETARY FUND. Macroprudential policy: an organizing framework. Washington, DC: International Monetary Fund, 2011c.
INTERNATIONAL MONETARY FUND. The liberalization and management of capital flows Washington, DC: International Monetary Fund, 2012a.
INTERNATIONAL MONETARY FUND. Liberalizing capital flows and managing outflows Washington, DC: International Monetary Fund, 2012b.
INTERNATIONAL MONETARY FUND. Guidance note for the liberalization and management of capital flows Washington, DC: International Monetary Fund, 2013a.
JOHNSTON, B.; RYAN, C. The impact of controls on capital movements on the private capital accounts of countries balance of payments: empirical estimates and policy implications. Washington, DC: International Monetary Fund, 1994. (IMF Working Paper, WP/94/78).
JOHNSTON, B.; TAMIRISA, N. Why do countries use capital controls? Washington, DC: International Monetary Fund, 1998. (IMF Working Paper, WP/98/181).
KAMINSKY, G.; REINHART, C.; VÉGH, C. When it rains, it pours: procyclical capital flows and macroeconomic policies. Cambridge, MA: National Bureau of Economic Research, 2004. (NBER Working Paper, n. w10780).
KLEIN, M. Capital controls: gates versus walls. Cambridge, MA: National Bureau of Economic Research, 2012. (NBER Working Paper, n. w18526).
KORINEK, A. The new economics of prudential capital controls: A research agenda. IMF Economic Review, v. 59, n. 3, p. 523-561, 2011.
KORINEK, A. Capital controls and currency wars Unpublished Manuscript. Department of Economics, University of Maryland, Maryland, United States, 2012.
KOSE, M. A.; PRASAD, E.; ROGOFF, K.; WEI, S. J. Financial globalization: a reappraisal. IMF Staff Papers, v. 56, n. 1, p. 8-62, 2009.
LANE, P. R.; MILESI-FERRETTI, G. M. The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004. Journal of International Economics, v. 73, n. 2, p. 223-250, 2007.
MAGUD, N. E., REINHART, C. M., & ROGOFF, K. S. Capital controls: myth and reality – A portfolio balance approach. Cambridge, MA: National Bureau of Economic Research, 2011. (NBER Working Paper, n. w16805).
OCAMPO, J. A. Balance-of-payments dominance: implications for macroeconomic policy. In: DAMILL, M.; RAPETTI, M.; ROZENWURCEL, G. (Ed.). Macroeconomics and development: Roberto Frenkel and the Economics of Latin America. Columbia University Press, 2016.
OLIVEIRA, G. C. Desajustes globais e a inserção da periferia (1990-2010). Revista Tempo do Mundo, v. 3, n. 1, p.157-187, 2011.
OLIVEIRA, G. C. Instabilidade estrutural e evolução dos fluxos internacionais de capitais privados líquidos para a periferia (1990-2009). In: CINTRA, M. A.; GOMES, K. D. R. (Org.). As transformações no sistema financeiro internacional IPEA, v. 2, p. 501-545, 2012.
OSTRY, J. D.; GHOSH, A. R. Obstacles to international policy coordination, and how to overcome them. Washington, DC: International Monetary Fund, 2013. (IMF Staff Discussion Note, SDN/13/11).
OSTRY, J. D.; GHOSH, A. R.; CHAMON, M.; QURESHI, M. S. Tools for managing financial-stability risks from capital inflows. Journal of International Economics, v. 88, n. 2, p. 407-421, 2012.
OSTRY, J. D.; GHOSH, A. R.; HABERMEIER, K.; CHAMON, M.; QURESHI, M.; LEAVEN, L.; KOKENYE, A. Managing capital inflows: what tools to use? Washington, DC: International Monetary Fund, 2011. (IMF Staff Discussion Note, SDN/11/06).
OSTRY, J. D.; GHOSH, A. R.; HABERMEIER, K.; CHAMON, M.; QURESHI, M.; REINHARDT, D. Capital inflows: the role of controls. Washington, DC: International Monetary Fund, 2010. (IMF Staff Position Note, SPN/10/04).
OSTRY, J. D.; GHOSH, A. R.; KORINEK, A. Multilateral aspects of managing the capital account. Washington, DC: International Monetary Fund, 2012. (IMF Staff Discussion Note, SDN/12/10).
OSTRY, J. D.; LOUNGANI, P.; FURCERI, D. Neoliberalism: oversold? Finance & Development, v. 53, n. 2 p. 38-41, 2016.
PASRICHA, G. K.; FALAGIARDA, M.; BIJSTERBOSCH, M.; AIZENMAN, J. Domestic and multilateral effects of capital controls in emerging markets. Journal of International Economics, v. 115, p. 48-58, 2018.
PRASAD, E.; RAJAN, R. Controlled capital account liberalization: a proposal. Washington, DC: International Monetary Fund, 2005. (IMF Policy Discussion Paper, PDP/05/xx).
PRASAD, E.; RAJAN, R.; SUBRAMANIAN, A. Foreign capital and economic growth. Brookings Papers on Economic Activity, v. 1, p. 153-209, 2007.
PRASAD, E.; ROGOFF, K.; WEI, S.; KOSE, A. Effects of financial globalization on developing countries: some empirical evidence. Washington, DC: International Monetary Fund, 2003. (IMF Occasional Paper, n. 220).
PRATES, D. M. As assimetrias do sistema monetário e financeiro internacional. Revista de Economia Contemporânea, v. 9, n. 2, p. 263-288, 2005.
PRATES, D. M.; CINTRA, M. A. M. Keynes e a hierarquia de moedas: possíveis lições para o Brasil. In: SICSÚ, J.; VIDOTTO, C. (Org.). Economia do desenvolvimento: teoria e políticas keynesianas. Rio de Janeiro: Campus Elsevier, 2008. p. 175-199.
REINHART, C. M.; ROGOFF, K. S.; SAVASTANO, M. A. Debt intolerance. Cambridge, MA: National Bureau of Economic Research, 2003. (NBER Working Paper, n. w9908).
REY, H. Dilemma not trilemma: the global financial cycle and monetary policy independence. (NBER Working Paper, n. w21162). Cambridge, MA: National Bureau of Economic Research, 2015.
RODRIK, D.; SUBRAMANIAN, A. Why did financial globalization disappoint? IMF Staff Papers, v. 56, n. 1, p. 112-138, 2009.
RODRIK, D.; VELASCO, A. Short-term capital flows. Cambridge, MA: National Bureau of Economic Research, 1999. (NBER Working Paper, n. w7364).
ROSSI, M. Financial fragility and economic performance in developing economies: do capital controls, prudential regulation and supervision matter? Washington, DC: International Monetary Fund, 1999. (IMF Working Paper, WP/99/66).
SCHINDLER, M. Measuring financial integration: a new data set. IMF Staff papers, v. 56, n. 1, p. 222-238, 2009.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Copyright (c) 2023 Economia e Sociedade
Downloads
