2014年-IMF国际货币组织全球_Effectiveness_of_Capital_Outflow_Restrictions_34页_588kb

Summary of "Effectiveness of Capital Outflow Restrictions"

Core Content

This IMF Working Paper evaluates the effectiveness of capital outflow restrictions in 37 emerging market economies from 1995 to 2010 using a panel vector autoregression (PVAR) approach. The study focuses on whether tightening outflow restrictions can help reduce net capital outflows, and under what conditions this might be effective.

Main Views

• Capital outflow restrictions are often used by emerging market economies to manage volatile capital flows, especially during crisis periods.
• The effectiveness of such restrictions is conditional on the presence of strong macroeconomic fundamentals, good institutions, or already comprehensive existing restrictions.
• Tightening outflow restrictions on average reduces gross capital outflows, but also causes a contraction in gross inflows, which can offset the intended effect, leading to no net reduction in capital outflows for the average country.
• Event studies have shown limited evidence of the effectiveness of outflow restrictions, with notable exceptions like Malaysia (1998) and Iceland (2008), where tightening restrictions helped stabilize the exchange rate and interest rates.
• The study highlights the endogeneity issue in previous research, where the introduction of restrictions often follows capital flow movements, potentially biasing results.

Key Information

Sample and Methodology

• The study covers 37 emerging market economies between 1995 and 2010.
• It uses a panel vector autoregression (PVAR) approach to analyze the effects of outflow restrictions, incorporating interaction terms to reflect structural characteristics of countries.
• The Schindler index is used to measure the narrow de jure restrictiveness of capital outflow policies.

Definitions and Variables

• Net inflows are defined as the sum of net assets and net liabilities, expressed as a percentage of GDP.
• Gross inflows and gross outflows are calculated based on the magnitude of net flows, with the convention that gross flows cannot be negative.
• Macroeconomic fundamentals include GDP growth, inflation, fiscal balance, and current account surplus.
• Institutional quality is measured by the World Bank's Government Effectiveness Index.

Empirical Findings

• Tightening of outflow restrictions is effective only when:
  • The country has strong macroeconomic fundamentals.
  • The country has good institutions.
  • The pre-existing restrictions are already comprehensive.
• In the absence of these conditions, tightening outflow restrictions fails to reduce net capital outflows, as it causes a significant decline in gross inflows.
• The effectiveness of outflow restrictions is robust to specification changes when the above conditions are met.

Country Experiences

• Thailand (1997): Tightening of outflow restrictions failed to prevent exchange rate depreciation and reserve decline, and was later abandoned.
• Malaysia (1998): Tightening of restrictions helped halt capital flight and stabilize the exchange rate.
• Iceland (2008): Tightening of outflow controls during the financial crisis limited capital outflows and allowed the krona to stabilize.
• Ukraine (2008-09): Tightening of controls did not alleviate the need for massive central bank intervention and undermined policy credibility.

Limitations and Future Work

• The paper does not investigate the impact of long-standing restrictions on capital flows.
• It also does not assess the benefits and costs of capital flow management.
• The Schindler index and the IMF staff's narrow restrictiveness index show a high correlation (92%) for the period up to 2005.

Conclusion

• The effectiveness of capital outflow restrictions is context-dependent.
• Tightening such restrictions can be beneficial only when accompanied by strong macroeconomic fundamentals, good institutions, or already comprehensive restrictions.
• The study emphasizes the importance of considering endogeneity in future research to better understand the role of capital controls in managing financial flows.

Tables and Figures

• Table 1: Lists the 37 countries in the sample.
• Table 2: Provides definitions and sources of variables used in the analysis.
• Table 3: Shows summary statistics of selected variables.
• Table 4: Compares outflow control indices in 1995 and 2010.
• Table 5: Details the characteristics of countries that implemented outflow controls, including crisis periods and macroeconomic conditions.
• Figure 1: Illustrates the number of emerging market countries tightening capital outflow restrictions between 1996 and 2010.
• Impulse Response Functions (Figures 2-6) show the effects of outflow restrictions on exchange rates, interest rates, and capital flows, with varying outcomes based on country-specific conditions.

Keywords

• Capital flows
• Capital controls
• Emerging economies
• Macroeconomic fundamentals
• Institutional quality

JEL Classification Numbers

• F3 (International Economics)
• F65 (Economic Development)
• E5 (Money and Payment Systems)