Bank of Canada paper studies capital control motivations
Researcher finds tools are used with both “mercantilist” and “macro-prudential” motivations
Emerging markets implement capital controls partly for mercantilist and partly macro-prudential ends, according to research published by the Bank of Canada.
“The results provide clear evidence that capital controls policy in emerging markets has been systematic, and that it has responded to both macro-prudential and mercantilist motivations,” Gurnain Pasricha writes in the working paper.
Pasricha designs a policy rule that represents the decision to impose controls, without claiming the rule
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