Preconditions for Liberalization of Capital Flows: A Review and Interpretation
Gothenburg University WP 1996:4
Posted: 10 Apr 1997
Date Written: August 1996
Argument for delaying capital account convertibility in the sequencing of a liberalization program are reviewed. Several of the common arguments for capital controls are questioned here on the grounds that they depend on assumptions about policy and market failures being exogenous. Relaxing capital controls may actually provide policymakers with incentives to address market failures directly. It will also be argued that a capital control policy requires the fine-tuning of the controls for desired objectives to be achieved.
JEL Classification: F32, F21, F39
Suggested Citation: Suggested Citation