Economic Effects and Structural Determinants of Capital Controls

48 Pages Posted: 15 Feb 2006

See all articles by Vittorio Grilli

Vittorio Grilli

Independent; National Bureau of Economic Research (NBER)

Date Written: March 1995


This paper studies determinants and effects of capital controls using a panel of 61 developed and developing countries. The results suggest that capital account restrictions are more likely to be in place in countries with low income, a large share of government, and where the central bank is not independent. Other determinants of controls include the exchange rate regime, current account imbalances and the degree of openness of the economy. We also find that capital controls and other foreign exchange restrictions are associated with higher inflation and lower real interest rates. We do not find any robust correlation between our measures of controls and the rate of growth, although there is evidence that countries with large black market premia grow more slowly.

JEL Classification: F21, F32

Suggested Citation

Grilli, Vittorio, Economic Effects and Structural Determinants of Capital Controls (March 1995). IMF Working Paper No. 95/31, Available at SSRN:

Vittorio Grilli (Contact Author)


Ministero del Tesoro
Direzione Generale del Tesoro Capo del Servizio I via XX Settembre 97

National Bureau of Economic Research (NBER)

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