August 2020: New VoxEU Column – Managing capital flows to emerging markets

by Bilge Erten, Anton Korinek and José and Antonio Ocampo

Recent market volatility has underlined how fickle international capital flows can be, and how important it is for emerging economies to have an adequate system of macroprudential policies in place. Capital controls that protect recipient countries from excessively risky types of flows are a crucial ingredient of such a system. This column motivates capital controls theoretically based on the existence of externalities from capital flows, describes recent empirical evidence on their use, and summarises the surrounding policy debate.

Link: Managing Capital Flows to Emerging Markets