How Effective are Capital Controls? Evidence from Malaysia
This paper examines the role of capital controls as a macroeconomic policy tool in light of the Malaysian experience. It consists of an econometric analysis of quarterly data over the period 1990–2010 using newly constructed capital inflow and outflow policy indexes as well as analytical narratives...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
World Scientific Publishing
2012-12-01
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| Series: | Asian Development Review |
| Online Access: | https://www.worldscientific.com/doi/10.1142/S0116110512500096 |
| _version_ | 1797793822030168064 |
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| author | Prema-Chandra Athukorala Juthathip Jongwanich |
| author_facet | Prema-Chandra Athukorala Juthathip Jongwanich |
| author_sort | Prema-Chandra Athukorala |
| collection | DOAJ |
| description | This paper examines the role of capital controls as a macroeconomic policy tool in light of the Malaysian experience. It consists of an econometric analysis of quarterly data over the period 1990–2010 using newly constructed capital inflow and outflow policy indexes as well as analytical narratives of episodes of controls imposed on inflows (1994) and outflows (1998–1999). The findings suggest that well-targeted controls have the potential to tame both short-term capital inflows and outflows without exerting a backwash effect on foreign direct investment, at least in the short to medium term. Controls on capital inflows introduced in the first half of 1994 helped moderate accumulation of short-term capital flows, particularly short-term bank credit. During 1998–1999, carefully designed temporary capital controls were successful in providing Malaysian policymakers a viable setting for applying the standard Keynesian therapy. |
| first_indexed | 2024-03-13T02:53:53Z |
| format | Article |
| id | doaj.art-bc0d6eb9357d48b79507ff3c671eff2e |
| institution | Directory Open Access Journal |
| issn | 0116-1105 1996-7241 |
| language | English |
| last_indexed | 2024-03-13T02:53:53Z |
| publishDate | 2012-12-01 |
| publisher | World Scientific Publishing |
| record_format | Article |
| series | Asian Development Review |
| spelling | doaj.art-bc0d6eb9357d48b79507ff3c671eff2e2023-06-28T08:50:44ZengWorld Scientific PublishingAsian Development Review0116-11051996-72412012-12-01290214710.1142/S0116110512500096How Effective are Capital Controls? Evidence from MalaysiaPrema-Chandra AthukoralaJuthathip JongwanichThis paper examines the role of capital controls as a macroeconomic policy tool in light of the Malaysian experience. It consists of an econometric analysis of quarterly data over the period 1990–2010 using newly constructed capital inflow and outflow policy indexes as well as analytical narratives of episodes of controls imposed on inflows (1994) and outflows (1998–1999). The findings suggest that well-targeted controls have the potential to tame both short-term capital inflows and outflows without exerting a backwash effect on foreign direct investment, at least in the short to medium term. Controls on capital inflows introduced in the first half of 1994 helped moderate accumulation of short-term capital flows, particularly short-term bank credit. During 1998–1999, carefully designed temporary capital controls were successful in providing Malaysian policymakers a viable setting for applying the standard Keynesian therapy.https://www.worldscientific.com/doi/10.1142/S0116110512500096 |
| spellingShingle | Prema-Chandra Athukorala Juthathip Jongwanich How Effective are Capital Controls? Evidence from Malaysia Asian Development Review |
| title | How Effective are Capital Controls? Evidence from Malaysia |
| title_full | How Effective are Capital Controls? Evidence from Malaysia |
| title_fullStr | How Effective are Capital Controls? Evidence from Malaysia |
| title_full_unstemmed | How Effective are Capital Controls? Evidence from Malaysia |
| title_short | How Effective are Capital Controls? Evidence from Malaysia |
| title_sort | how effective are capital controls evidence from malaysia |
| url | https://www.worldscientific.com/doi/10.1142/S0116110512500096 |
| work_keys_str_mv | AT premachandraathukorala howeffectivearecapitalcontrolsevidencefrommalaysia AT juthathipjongwanich howeffectivearecapitalcontrolsevidencefrommalaysia |