Date of Award


Document Type

Honors Thesis (Open Access)


Colby College. Economics Dept.


Andreas Waldkirch


Capital flows have become increasingly more volatile over the past

decade, causing growing concern in emerging markets over the potential damages

large sudden capital inflows and outflows can cause those economies. Capital

controls have been used since World War I as a way to try to control these flows.

After being abolished nearly everywhere, they have recently been reintroduced in

a number of countries. The main analysis of this paper looks at the effect of the

capital controls on capital inflows from 2000 through 2010 in an 8 country sample

of emerging markets who have recently implemented changes in their capital

control policies: Brazil, Colombia, Indonesia, South Korea, Peru, South Africa,

Thailand and Turkey. The paper adds to the current literature by contributing a

cross-country analysis, as well as by using a more sophisticated measure of

capital controls. Despite these measures, this paper finds that there is no robust

evidence that capital controls significantly reduce short-term or long-term

inflows, confirming the results of previous literature. Thus, this paper concludes

that the use of capital controls as one way to control the volatile capital flows

cannot be supported.


Capital Controls, Investment, Emerging Markets

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