A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation
We develop a theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite-horizon endowment economy with two countries. One country chooses taxes on international capital flows in order to maximize the welfare of its representative agent, while the other country is passive...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Article |
| Language: | en_US |
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University of Chicago Press, The
2015
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| Online Access: | http://hdl.handle.net/1721.1/95955 https://orcid.org/0000-0003-2370-5575 https://orcid.org/0000-0002-5503-297X |
| _version_ | 1826211919208382464 |
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| author | Costinot, Arnaud Lorenzoni, Guido Werning, Ivan |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Costinot, Arnaud Lorenzoni, Guido Werning, Ivan |
| author_sort | Costinot, Arnaud |
| collection | MIT |
| description | We develop a theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite-horizon endowment economy with two countries. One country chooses taxes on international capital flows in order to maximize the welfare of its representative agent, while the other country is passive. We show that a country growing faster than the rest of the world has incentives to promote domestic savings by taxing capital inflows or subsidizing capital outflows. Although our theory of capital controls emphasizes interest rate manipulation, the pattern of borrowing and lending, per se, is irrelevant. |
| first_indexed | 2024-09-23T15:13:32Z |
| format | Article |
| id | mit-1721.1/95955 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T15:13:32Z |
| publishDate | 2015 |
| publisher | University of Chicago Press, The |
| record_format | dspace |
| spelling | mit-1721.1/959552022-10-02T01:28:11Z A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation Costinot, Arnaud Lorenzoni, Guido Werning, Ivan Massachusetts Institute of Technology. Department of Economics Costinot, Arnaud Werning, Ivan We develop a theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite-horizon endowment economy with two countries. One country chooses taxes on international capital flows in order to maximize the welfare of its representative agent, while the other country is passive. We show that a country growing faster than the rest of the world has incentives to promote domestic savings by taxing capital inflows or subsidizing capital outflows. Although our theory of capital controls emphasizes interest rate manipulation, the pattern of borrowing and lending, per se, is irrelevant. 2015-03-11T18:45:23Z 2015-03-11T18:45:23Z 2014-02 Article http://purl.org/eprint/type/JournalArticle 00223808 1537534X http://hdl.handle.net/1721.1/95955 Costinot, Arnaud, Guido Lorenzoni, and Ivan Werning. “A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation.” Journal of Political Economy 122, no. 1 (February 2014): 77–128. © 2014 The University of Chicago Press https://orcid.org/0000-0003-2370-5575 https://orcid.org/0000-0002-5503-297X en_US http://dx.doi.org/10.1086/674425 Journal of Political Economy Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf University of Chicago Press, The University of Chicago Press |
| spellingShingle | Costinot, Arnaud Lorenzoni, Guido Werning, Ivan A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation |
| title | A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation |
| title_full | A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation |
| title_fullStr | A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation |
| title_full_unstemmed | A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation |
| title_short | A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation |
| title_sort | theory of capital controls as dynamic terms of trade manipulation |
| url | http://hdl.handle.net/1721.1/95955 https://orcid.org/0000-0003-2370-5575 https://orcid.org/0000-0002-5503-297X |
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