The gathering world slump and the battle over capital controls

The Asian financial crisis and its ill effects on the global economy are engaging economists and policy analysts in acrimonious debates over the wisdom of implementing capital controls. Proponents of capital controls argue that one way to save the Asian economy and prevent the crisis from spreading on a global scale is to curb the flow of capital by lowering interest rates and generating monetary expansion. Critics, however, claim that capital controls undermine the efficient use of capital flow and result in lower returns to capital.