Capital Controls Checkup: Cases, Customs, Consequences

This paper examines the effect of administrative restrictions on cross-border capital transactions. Using highly disaggregated data from the German balance of payments statistics for the period from 1999 through 2017, we document several stylized facts about the effectiveness of such capital control policies introduced by other countries. Capital controls are associated with economically and statistically significant declines in capital flows; they affect bilateral financial relationships along both the extensive and the intensive margin. JEL Classification F32 * F36 * F38
1 Introduction Many countries impose restrictions on cross-border financial transactions. According to the Chinn-Ito index, a popular and regularly updated index of a country's degree of capital account openness, only [...]