Is Optimal Capital-Control Policy Countercyclical In Open-Economy Models With Collateral Constraints?

Schmitt-Grohé, Stephanie and Martín Uribe ()
Authors registered in the RePEc Author Service: Stephanie Schmitt-Grohe

No 11619, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper contributes to a literature that studies optimal capital control policy in open economy models with pecuniary externalities due to flow collateral constraints. It shows that the optimal policy calls for capital controls to be lowered during booms and to be increased during recessions. Moreover, in the run-up to a financial crisis optimal capital controls rise as the contraction sets in and reach their highest level at the peak of the crisis. These findings are at odds with the conventional view that capital controls should be tightened during expansions to curb capital inflows and relaxed during contractions to discourage capital flight.

JEL-codes: E44 F41 G01 H23 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-dge, nep-mac, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://cepr.org/publications/DP11619 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Is Optimal Capital Control Policy Countercyclical in Open Economy Models with Collateral Constraints? (2017)
Working Paper: Is Optimal Capital-Control Policy Countercyclical In Open-Economy Models With Collateral Constraints? (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:11619

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11619

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().