TY  - JOUR
AU  - Edwards,Sebastian
TI  - Interest Rates, Contagion and Capital Controls
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7801
PY  - 2000
Y2  - July 2000
UR  - http://www.nber.org/papers/w7801
L1  - http://www.nber.org/papers/w7801.pdf
N1  - Author contact info:
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
AB  - In this paper I analyze several issues related to contagion,' including its definition, recent experiences, alternative channels at work, and possible prevention mechanisms. The discussion deals with the macroeconomics implications of contagion, and concentrates on the relationship between the degree of openness of the capital account and the transmission of foreign shocks.  More specifically, I ask whether restrictions to capital mobility   and, in particular, controls on capital inflows of the type Chile implemented throughout most of the 1990s   reduce a country's vulnerability to contagion.  I also deal, albeit briefly, with the connection between the exchange rate regime and the propagation of international shocks. The evidence presented in this paper shows that the effectiveness of Chile's controls on inflows has often been overstated.  Indeed, Chile was severely affected by the East Asian, Russian and Brazilian crises.
ER  -