초록 열기/닫기 버튼
A neoclassical model reveals that capital controls depress capital flows by adjusting the marginal benefits and costs of additional asset purchases. According to this view, their effectiveness might be dependent on the volume of flows. To study this possibility, we examined the associations between capital flows and controls using the Powell’s (2022) quantile regression methodology. The data used cover 43 emerging market economies between 1995 and 2019. Our results suggest that capital controls are differently associated with capital flows depending on the conditional distributions of capital flows and this implies capital controls could be effective but only when implemented appropriately depending on the volume of inward and outward capital flows. Therefore, the government must carefully and precisely set restrictions depending on the volume of capital flows, which might be an extremely challenging task.
