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- Title
The Role of Capital Controls in Mediating Global Shocks.
- Authors
Lille, Kerli
- Abstract
This paper studies the role of capital controls in the transmission of global commodity price shocks in explaining the variation of domestic business cycles in 89 countries for the period 1995-2013. The results suggest that countries that are relatively open or closed have lower variance in output, consumption and investments explained by global shocks than those countries that have partially liberalised capital markets. On the contrary, relatively closed and open economies have a much higher share of the trade balance to output ratio volatility explained than partially liberalised countries. This pattern is independent of the level of economic development or geographical region. The results show that a partial liberalisation of the capital account might make countries more vulnerable to world shocks, than opening and closing the capital account completely.
- Subjects
UNITED States; CAPITAL movements; GREAT Recession, 2008-2013; FINANCIAL markets; FISCAL policy; PRICES
- Publication
University of Tartu - Faculty of Economics & Business Administration Working Paper Series, 2017, Issue 102, p3
- ISSN
1406-5967
- Publication type
Article