Date of Award
Honors Thesis (Open Access)
Colby College. Economics Dept.
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
Recommended CitationDavis, Kathleen A., "The Effectiveness of Capital Controls on Capital Inflows in Emerging Markets" (2012). Honors Theses. Paper 628.
Colby College theses are protected by copyright. They may be viewed or downloaded from this site for the purposes of research and scholarship. Reproduction or distribution for commercial purposes is prohibited without written permission of the author.