Arbeitspapier
Ineffective controls on capital inflows under sophisticated financial markets: Brazil in the nineties
We analyze the Brazilian experience in the 1990s to access the effectiveness of controls on capital inflows in restricting financial inflows and changing their composition towards long term flows. Econometric exercises (VARs) lead us to conclude that controls on capital inflows were effective in deterring financial inflows for only a brief period, from two to six months. The hypothesis to explain the ineffectiveness of the controls is that financial institutions performed several operations aimed at avoiding capital controls. We then conducted interviews with market players in order to provide several examples of the financial strategies that were used in this period to invest in the Brazilian fixed income market while bypassing capital controls. The main conclusion is that controls on capital inflows, while they may be desirable, are of very limited effectiveness under sophisticated financial markets. Therefore, policy-makers should avoid spending the scarce resources of bank supervision trying to implement them and focus more in improving economic policy.
- Language
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Englisch
- Bibliographic citation
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Series: Texto para discussão ; No. 516
- Classification
-
Wirtschaft
Financial Markets and the Macroeconomy
Current Account Adjustment; Short-term Capital Movements
International Lending and Debt Problems
Financial Aspects of Economic Integration
International Financial Markets
- Subject
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Kapitalverkehrskontrolle
Kapitalimport
Brasilien
- Event
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Geistige Schöpfung
- (who)
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Carvalho, Bernardo S. de M.
Garcia, Márcio G. P.
- Event
-
Veröffentlichung
- (who)
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Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia
- (where)
-
Rio de Janeiro
- (when)
-
2006
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Carvalho, Bernardo S. de M.
- Garcia, Márcio G. P.
- Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia
Time of origin
- 2006
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Capital inflows into Brazil, 1992-98: the nature and effects of controls and restrictions
Capital flows to Brazil in the nineties: Macroeconomic aspects and the effectiveness of capital controls
Capital controls in Brazil: effective?
Fiscal decentralization and subnational fiscal autonomy in Brazil: Some facts of the nineties
Transmission of monetary policy through capital inflows to emerging markets
Analysis of international capital inflows and institutional quality in emerging markets
Capital inflows and real appreciation in emerging markets : further empirical evidence
Management education for the nineties
The impact of foreign direct investment inflows on regional labour markets in Hungary
Spatial dynamics of labor markets in Brazil
Capital flows, capital controls and currency crisis: The case of Brazil in the nineties
Brazil: Growth exercises for the nineties
Capital inflows into Brazil, 1992-98: the nature and effects of controls and restrictions
Capital flows to Brazil in the nineties: Macroeconomic aspects and the effectiveness of capital controls
Capital controls in Brazil: effective?
Fiscal decentralization and subnational fiscal autonomy in Brazil: Some facts of the nineties
Transmission of monetary policy through capital inflows to emerging markets
Analysis of international capital inflows and institutional quality in emerging markets
Capital inflows and real appreciation in emerging markets : further empirical evidence
Management education for the nineties
The impact of foreign direct investment inflows on regional labour markets in Hungary