Can Short-Term Capital Controls Promote Capital Inflows?
Electronic Access:
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Summary:
In an economy à la Diamond and Dybvig (1983), we present an example in which foreign lenders find it profitable to invest in an emerging market if, and only if, the emerging market government imposes taxes on short-term capital inflows. This implies that capital controls that are effective in reducing the vulnerability of emerging markets to financial crises may increase the volume of capital inflows.
Series:
Working Paper No. 1998/131
Subject:
Balance of payments Capital controls Capital flows Capital inflows Emerging and frontier financial markets Financial crises Financial markets
English
Publication Date:
September 1, 1998
ISBN/ISSN:
9781451855258/1018-5941
Stock No:
WPIEA1311998
Pages:
10
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