Are Capital Controls Effective in the 21st Century? the Recent Experience of Colombia

February 1, 2009

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Format: Chicago

Benedict J. Clements, and Herman Kamil. Are Capital Controls Effective in the 21st Century? the Recent Experience of Colombia, (USA: International Monetary Fund, 2009) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper assesses the effects of capital controls imposed in Colombia in 2007 on capital flows and exchange rate dynamics. The results suggest that the controls were successful in reducing external borrowing, but had no statistically significant impact on the volume of non- FDI flows as a whole. We find no evidence that restrictions to capital mobility moderated the appreciation of Colombia's currency, or increased the degree of independence of monetary policy. We also find that controls have significantly increased the volatility of the exchange rate. Additional research is needed to assess the effects of capital controls on financial stability.

Subject: Balance of payments, Capital controls, Capital flows, Capital inflows, Exchange rates, Expenditure, Foreign exchange, Pension spending

Keywords: Capital control, Capital Controls, Capital flow, Capital flows, Capital Inflows, Controls era, Exchange rate intervention, Exchange Rate Models, Exchange rate volatility, Exchange rates, Foreign currency, Global, Interest rate differential, Market trading, Pension spending, Post control period, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/030
Stock No:

WPIEA2009030
ISBN:

9781451871777
ISSN:

1018-5941

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