Capital Mobility and Exchange Market Intervention in Developing Countries

46 Pages Posted: 15 Feb 2006

See all articles by Donald J. Mathieson

Donald J. Mathieson

International Monetary Fund (IMF)

Liliana Rojas-Suarez

Center for Global Development

Date Written: November 1996

Abstract

Official controls on interest rates and capital flows rule out the use of traditional interest rate parity conditions to measure changes in the degree of capital mobility confronting developing countries. This paper develops an alternative technique for measuring the cost of undertaking disguised capital flows when such official controls are present. This measure is derived from an intertemporal, optimizing model of an open economy incorporating the influence of the authorities` foreign exchange market activities. The paper suggests that the real cost of undertaking disguised capital flows declined on average by nearly 70 percent between the early 1970s and the late 1980s.

JEL Classification: F32, F36, F4

Suggested Citation

Mathieson, Donald J. and Rojas-Suarez, Liliana, Capital Mobility and Exchange Market Intervention in Developing Countries (November 1996). IMF Working Paper No. 96/131, Available at SSRN: https://ssrn.com/abstract=883027

Donald J. Mathieson

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Liliana Rojas-Suarez

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
47
Abstract Views
691
PlumX Metrics