Skip to Main content Skip to Navigation
Journal articles

On the timing and optimality of capital controls: public expenditures, debt dynamics and welfare

Abstract : This paper solves a second-best problem where a government has to choose whether to tax financial inflows (capital controls) or not, and when. A multi-stage optimal control technique is used to this end. First, it is shown that it is optimal to switch in finite time from capital controls to full financial liberalization whenever a measure of total wealth is above a certain threshold. In particular, a too large initial debt makes financial liberalization sub-optimal. Second, capital controls should be used countercyclically. Third, financial liberalization is not unaffordable only for poor countries, even wealthy countries might find it optimal to implement capital controls if they aim to keep a large amount of public expenditure.
Mots-clés : Economie quantitative
Document type :
Journal articles
Complete list of metadata

https://hal.inrae.fr/hal-02644621
Contributor : Migration ProdInra Connect in order to contact the contributor
Submitted on : Thursday, May 28, 2020 - 11:06:31 PM
Last modification on : Friday, August 5, 2022 - 10:35:28 AM

Links full text

Identifiers

Citation

Raouf Boucekkine, Aude Pommeret, Fabien Prieur. On the timing and optimality of capital controls: public expenditures, debt dynamics and welfare. International Journal of Economic Theory, Wiley, 2013, 9 (1), pp.101-112. ⟨10.1111/j.1742-7363.2013.12003.x⟩. ⟨hal-02644621⟩

Share

Metrics

Record views

333