Domestic and multilateral effects of capital controls in emerging markets

Gurnain Kaur Pasricha, Matteo Falagiarda, Martin Bijsterbosch, Joshua Aizenman

Research output: Contribution to journalArticlepeer-review

44 Scopus citations


Using a novel, high frequency dataset on capital control actions in 16 emerging market economies (EMEs) from 2001 to 2012, we provide new evidence on the domestic and multilateral effects of capital controls. Increases in capital account openness reduce monetary policy autonomy and increase exchange rate stability, confirming the constraints of the monetary policy trilemma. Both gross in- and outflows rise, while the effect on net capital flows is ambiguous. Tighter capital inflow restrictions generated significant spillovers, especially in the post-2008 environment of abundant global liquidity. We also find evidence of a domestic policy response to foreign capital control changes in countries that are affected by these spillovers.

Original languageEnglish
Pages (from-to)48-58
Number of pages11
JournalJournal of International Economics
StatePublished - 1 Nov 2018
Externally publishedYes


  • Capital controls
  • Capital flows
  • Cross-border spillovers
  • Monetary policy trilemma

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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