Capital controls ineffective at handling policy trilemma, ECB paper finds
Controls have limited impact on target variables and come with spillovers
Capital controls imposed by emerging markets may be less effective than previously thought while also having stronger spillovers, especially in the post-2008 world, according to a working paper published on August 25 by the European Central Bank.
Domestic and multilateral effects of capital controls in emerging markets, by Gurnain Pasricha, Matteo Falagiarda, Martin Bijsterbosch and Joshua Aizenman, tests 17 emerging market economies between 2001 and 2011 using a vector autoregressive method.
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