Capital Flow Deflection

This paper focuses on the coordination problem among countries imposing controls on capital inflows. In a simple model of capital flows and controls, we show that inflow restrictions distort international capital flows to other countries and that, in turn, such capital flow deflection may lead to a...

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Bibliographic Details
Main Authors:	Giordani, Paolo E., Ruta, Michele, Weisfeld, Hans, Zhu, Ling
Format:	Journal Article
Published:	Elsevier 2018
Subjects:	CAPITAL FLOWS CAPITAL CONTROLS CROSS-BORDER SPILLOVERS POLICY FOREIGN DIRECT INVESTMENT
Online Access:	http://hdl.handle.net/10986/29172

id	okr-10986-29172
recordtype	oai_dc
spelling	okr-10986-291722021-05-26T09:05:19Z Capital Flow Deflection Giordani, Paolo E. Ruta, Michele Weisfeld, Hans Zhu, Ling CAPITAL FLOWS CAPITAL CONTROLS CROSS-BORDER SPILLOVERS POLICY FOREIGN DIRECT INVESTMENT This paper focuses on the coordination problem among countries imposing controls on capital inflows. In a simple model of capital flows and controls, we show that inflow restrictions distort international capital flows to other countries and that, in turn, such capital flow deflection may lead to a policy response. We then test the theory using data on inflow restrictions and gross capital inflows for a large sample of developing countries between 1995 and 2009. Our estimation yields strong evidence that capital controls deflect capital flows to other countries with similar economic characteristics. Notwithstanding these strong cross-border spillover effects, we do not find evidence of a policy response. 2018-01-18T17:22:48Z 2018-01-18T17:22:48Z 2017-03 Journal Article Journal of International Economics 0022-1996 http://hdl.handle.net/10986/29172 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Elsevier Publications & Research :: Journal Article Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	CAPITAL FLOWS CAPITAL CONTROLS CROSS-BORDER SPILLOVERS POLICY FOREIGN DIRECT INVESTMENT
spellingShingle	CAPITAL FLOWS CAPITAL CONTROLS CROSS-BORDER SPILLOVERS POLICY FOREIGN DIRECT INVESTMENT Giordani, Paolo E. Ruta, Michele Weisfeld, Hans Zhu, Ling Capital Flow Deflection
description	This paper focuses on the coordination problem among countries imposing controls on capital inflows. In a simple model of capital flows and controls, we show that inflow restrictions distort international capital flows to other countries and that, in turn, such capital flow deflection may lead to a policy response. We then test the theory using data on inflow restrictions and gross capital inflows for a large sample of developing countries between 1995 and 2009. Our estimation yields strong evidence that capital controls deflect capital flows to other countries with similar economic characteristics. Notwithstanding these strong cross-border spillover effects, we do not find evidence of a policy response.
format	Journal Article
author	Giordani, Paolo E. Ruta, Michele Weisfeld, Hans Zhu, Ling
author_facet	Giordani, Paolo E. Ruta, Michele Weisfeld, Hans Zhu, Ling
author_sort	Giordani, Paolo E.
title	Capital Flow Deflection
title_short	Capital Flow Deflection
title_full	Capital Flow Deflection
title_fullStr	Capital Flow Deflection
title_full_unstemmed	Capital Flow Deflection
title_sort	capital flow deflection
publisher	Elsevier
publishDate	2018
url	http://hdl.handle.net/10986/29172
_version_	1764468685069615104

Capital Flow Deflection

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