Arbeitspapier
Welfare effects of capital controls
This paper studies the effect of capital controls on misallocation and welfare in an economy with financial constraints. We build a general equilibrium model with heterogeneous firms, financial constraints and international trade and calibrate it to the Chilean economy. Since high-productivity and exporting firms need to borrow more to reach their optimal scale, capital controls that tax international borrowing hit them harder. As a result, misallocation increases relatively more for this group of firms, and for young firms that are still trying to reach their optimal scale. In terms of welfare, the model predicts a sizable aggregate loss of 2.39 percent when capital controls are introduced, with welfare decreasing twice as much for high-productivity firms. We empirically corroborate the main insights in terms of misallocation obtained from the model using Chilean manufacturing firm data from 1990 to 2007.
- Sprache
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Englisch
- Erschienen in
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Series: IDB Working Paper Series ; No. IDB-WP-1229
- Klassifikation
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Wirtschaft
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Open Economy Macroeconomics
Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- Thema
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Capital controls
Welfare
Misallocation
Financial frictions
International trade
- Ereignis
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Geistige Schöpfung
- (wer)
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Andreasen, Eugenia
Bauducco, Sofía
Dardati, Evangelina
- Ereignis
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Veröffentlichung
- (wer)
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Inter-American Development Bank (IDB)
- (wo)
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Washington, DC
- (wann)
-
2021
- DOI
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doi:10.18235/0003307
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:41 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Andreasen, Eugenia
- Bauducco, Sofía
- Dardati, Evangelina
- Inter-American Development Bank (IDB)
Entstanden
- 2021