NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Capital Controls and the Timing of Exchange Regime Collapse

Daekuen Park, Jeffrey Sachs

NBER Working Paper No. 2250
Issued in May 1987
NBER Program(s):   ITI   IFM

This paper investigates the nature of balance of payments crises in regimes with capital controls. It extends earlier work on capital controls by assuming that households manage their consumption and asset portfolios to maximize intertemporal utility. Our main result is that capital controls are effective in delaying, but not preventing, a breakdown of a fixed exchange rate regime in the presence of money-financed fiscal deficits.

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Document Object Identifier (DOI): 10.3386/w2250

Published: Daekeun Park & Jeffrey D. Sachs, 1996. "The Timing Of Exchange Regime Collapse Under Capital Controls," International Economic Journal, Korean International Economic Association, vol. 10(4), pages 123-141, December.

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