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dc.titleCapital Controls or Real Exchange Rate Policy?: A Pecuniary Externality Perspective
dc.contributor.authorBenigno, Gianluca
dc.contributor.authorChen, Huigang
dc.contributor.authorOtrok, Christopher
dc.contributor.authorRebucci, Alessandro
dc.contributor.authorYoung, Eric R.
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageThe Caribbean
dc.coverageSouth America
dc.coverageCentral America
dc.date.available2013-05-09T00:00:00
dc.date.issue2013-03-01T00:00:00
dc.description.abstractIn the aftermath of the global financial crisis, a new policy paradigm has emerged in which old-fashioned policies such as capital controls and other government distortions have become part of the standard policy tool kit (so called macro- prudential policies). On the wave of this seemingly unanimous policy consensus, a new strand of theoretical literature contends that capital controls are welfare enhancing and can be justified rigorously because of second-best considerations. Within the same theoretical framework adopted in this fast-growing literature, this paper shows that a credible commitment to support the exchange rate in crisis times always welfare-dominates prudential capital controls, as it can achieve unconstrained allocation.
dc.format.extent33
dc.identifier.doihttp://dx.doi.org/10.18235/0011453
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Capital-Controls-or-Real-Exchange-Rate-Policy-A-Pecuniary-Externality-Perspective.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectFinancial Sector
dc.subject.jelcodeE52 - Monetary Policy
dc.subject.jelcodeF37 - International Finance Forecasting and Simulation: Models and Applications
dc.subject.jelcodeF41 - Open Economy Macroeconomics
dc.subject.keywordsIDB-WP-393
dc.typeWorking Papers
idb.identifier.pubnumberWorking Papers
idb.operationRG-K1098
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