Financial Stability News

News about financial stability, central banking and theory of money

IMF paper supports capital controls

Interesting post in the FT today with reference to new IMF paper that gives academic rationale for the increasing use of capital controls in emerging markets. Far from being “beggar thy neighbor” policies, they find that the negative externalities of the huge inflow of capital from developed countries justifies the restrictions on capital inflows. There is also a reference at the end of the post to the classic paper by Bhagwati that show that capital liberalization is not the same as trade liberalization. If you don’t read the IMF WP, at least read his short paper.


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