Fed confirms K controls work

Doug Henwood dhenwood at panix.com
Tue Oct 31 09:51:00 PST 2000


"Capital Controls During Financial Crises: The Case of Malaysia

and Thailand"

BY: HALI J. EDISON

Board of Governors of the Federal Reserve System

Division of International Finance

CARMEN M. REINHART

University of Maryland

School of Public Policy

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Paper ID: International Finance Working Paper No. 662

Date: March 2000

Contact: HALI J. EDISON

Email: Mailto:hali.edison at frb.gov

Postal: Board of Governors of the Federal Reserve System

Division of International Finance

Washington, DC 20551 USA

Phone: 202-452-3540

Fax: 202-736-5638

Co-Auth: CARMEN M. REINHART

Email: Mailto:reinhart at econ.umd.edu

Postal: University of Maryland

School of Public Policy

College Park, MD 20742-1815 USA

Paper Requests:

Please indicate title and IFDP number. Contact International

Finance Discussion Papers, Division of International Finance,

Stop 24, Board of Governors of the Federal Reserve System,

Washington, DC 20551. Phone:(202)452-3598 Fax:(202)736-5638

Mailto:IFDP at frb.gov

ABSTRACT:

This study examines the impact capital controls had in Malaysia

(1998-1999) and Thailand (1997). We aim to assess the extent to

which the capital controls were effective in delivering the

outcomes that motivated their imposition. We conclude that in

Thailand the controls did not deliver much of what was intended

- although, one does not observe the counterfactual. By

contrast, in the case of Malaysia the controls did align closely

with the priors of what controls are intended to achieve:

greater interest rate and exchange rate stability and more

policy autonomy.

Keywords: capital controls, capital flows, financial crises,

asian currency crisis, cross-border volatility



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