NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bernardo S. de M. Carvalho

E-Mail: bscarvalho@gaveainvest.com.br

NBER Working Papers and Publications

March 2008Ineffective Controls on Capital Inflows under Sophisticated Financial Markets: Brazil in the Nineties
with Márcio G. P. Garcia
in Financial Markets Volatility and Performance in Emerging Markets, Sebastian Edwards and Márcio G. P. Garcia, editors
June 2006Ineffective Controls on Capital Inflows Under Sophisticated Financial Markets: Brazil in the Nineties
with Márcio G.P. Garcia: w12283
We analyze the Brazilian experience in the 1990s to assess the effectiveness of controls on capital inflows in restricting financial inflows and changing their composition towards long term flows. Econometric exercises (VARs) showed that controls on capital inflows were effective in deterring financial inflows for only a brief period, from two to six months. The hypothesis to explain the ineffectiveness of the controls is that financial institutions performed several operations aimed at avoiding capital controls. To check this hypothesis, we conducted interviews with market players. We collected several examples of the financial strategies engineered to avoid the capital controls and invest in the Brazilian fixed income market. The main conclusion is that controls on capital inflows, while...

Published: Ineffective Controls on Capital Inflows under Sophisticated Financial Markets: Brazil in the Nineties, Bernardo S. de M. Carvalho, Márcio G. P. Garcia. in Financial Markets Volatility and Performance in Emerging Markets, Edwards and Garcia. 2008

 
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