Expanding the Landscape of Cross-Border Flow Restrictions: Modern Tools and Historical Perspectives

Employing large language models to analyze official documents, we construct a comprehensive record of daily changes in de jure restrictions on cross-border flows worldwide since the 1950s. Our analysis uncovers the wide array of instruments used to regulate cross-border financial flows and documents their evolving prevalence over the past seven decades. The fine granularity of the new measures allows us to characterize cross-country and time-series variation across eight categories of restrictions, further distinguishing by flow, direction, instrument type, and overall policy stance. We exploit the high frequency nature of the new data to document novel patterns in the use of these restrictions, as well as their relationship to crises, and political economy determinants. We validate our measures against established indicators of capital account regulation and show that our LLM-based classifications both replicate and substantially extend these benchmarks along multiple dimensions. Finally, we examine policymakers’ stated motivations for adopting these restrictions and account for the intensive margin of these policy actions.