Domestic and Multilateral Effects of Capital Controls in Emerging Markets

Gurnain Pasricha, Matteo Falagiarda, Martin Bijsterbosch, Joshua Aizenman

NBER Working Paper No. 20822
Issued in January 2015, Revised in July 2017
NBER Program(s):   IFM

Using a novel, high frequency dataset on capital control actions in 16 emerging market economies (EMEs) from 2001 to 2012, we provide new insights into the domestic and multilateral effects of capital controls. Increases in capital account openness reduce monetary policy autonomy and increase exchange rate stability, confirming the constraints of the monetary policy trilemma. Both gross in- and outflows rise, while the effect on net capital flows is ambiguous. Tighter capital inflow restrictions generated significant spillovers, especially in the post-2008 environment of abundant global liquidity. We also find evidence of a domestic policy response to foreign capital control changes in countries that are affected by these spillovers.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Supplementary materials for this paper:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20822

Users who downloaded this paper also downloaded* these:
Korinek and Sandri w20805 Capital Controls or Macroprudential Regulation?
Forbes, Fratzscher, and Straub w20860 Capital Flow Management Measures: What Are They Good For?
Alfaro, Chari, and Kanczuk w20726 The Real Effects of Capital Controls: Firm-Level Evidence from a Policy Experiment
Edwards w20893 Monetary Policy Independence under Flexible Exchange Rates: An Illusion?
Fernández, Klein, Rebucci, Schindler, and Uribe w20970 Capital Control Measures: A New Dataset
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us