On the Desirability of Capital Controls (Bachelor thesis)
Κούλα, Ρομίνα
In a standard two-country international macro model, we ask whether imposing restrictions on international non contingent borrowing and lending is ever desirable. The answer is yes. If one country imposes capital controls unilaterally, it can generate favorable changes in the dynamics of equilibrium interest rates and the terms of trade, and thereby benet at the expense of its trading partner. If both countries simultaneously impose capital controls, the welfare eects are ambiguous. We identify calibrations in which symmetric capital controls improve terms of trade insurance against country-specic shocks and thereby increase welfare for both countries.
| Institution and School/Department of submitter: | Σχολή Διοίκησης και Οικονομίας / Τμήμα Λογιστικής και Χρηματοοικονομικής |
| Subject classification: | Monetary policy Capital movements Νομισματική πολιτική Κινήσεις κεφαλαίων |
| Keywords: | Capital Controls;Terms of Trade;International Risk Sharing;Έλεγχοι κεφαλαίου;Όροι εμπορίου;Διεθνής κατανομή κινδύνων |
| Description: | In a standard two-country international macro model, we ask whether imposing restrictions on international non contingent borrowing and lending is ever desirable. The answer is yes. If one country imposes capital controls unilaterally, it can generate favorable changes in the dynamics of equilibrium interest rates and the terms of trade, and thereby benet at the expense of its trading partner. If both countries simultaneously impose capital controls, the welfare eects are ambiguous. We identify calibrations in which symmetric capital controls improve terms of trade insurance against country-specic shocks and thereby increase welfare for both countries. |
| URI: | http://195.251.240.227/jspui/handle/123456789/11986 |
| Table of contents: | Contents Page 1 Introduction ……………………………………………….....2 1.1 Related Literature……………………………....................................….4 2 The Model……………………………………………………6 2.1 Preferences and Technologies…………………………………………..6 2.2 Firm Problems……………………………………….……………….…8 2.3 International Relative Prices……………………………………………9 2.4 Asset Markets and Capital Controls……………………………………9 2.5 Household Problems and Definition of Equilibrium…………………..12 3 Calibration………………………………………………….13 3.1 Computation………………………………………………………...…14 4 Results………………………………………………………..15 4.1 Unilateral Capital Controls………………………………………….…16 4.1.1 Sensitivity……………………………………………………………….…..20 4.1.2 Conditional Capital Controls………………………………………..………22 4.1.3 Interest Rates versus Exchange Rates……………………………………….25 4.1.4 Alternative Model for Taxes………………………………….………..……27 4.2 Capital Control Wars…………………………………….……….……28 4.3 Pareto-Improving Capital Controls……………………………….…...30 5 Conclusion…………………………………………………...33 References....................................................................................................34 |
| Appears in Collections: | Πτυχιακές Εργασίες |
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http://195.251.240.227/jspui/handle/123456789/11986
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