% WARNING: This file may contain UTF-8 (unicode) characters. % While non-8-bit characters are officially unsupported in BibTeX, you % can use them with the biber backend of biblatex % usepackage[backend=biber]{biblatex} @techreport{NBERw12852, title = "Capital Controls, Capital Flow Contractions, and Macroeconomic Vulnerability", author = "Edwards, Sebastian", institution = "National Bureau of Economic Research", type = "Working Paper", series = "Working Paper Series", number = "12852", year = "2007", month = "January", doi = {10.3386/w12852}, URL = "http://www.nber.org/papers/w12852", abstract = {In this paper I analyze whether restrictions to capital mobility reduce vulnerability to external shocks. More specifically, I ask if countries that restrict the free flow of international capital have a lower probability of experiencing a large contraction in net capital flows. I use three new indexes on the degree of international financial integration and a large multi-country data set for 1970-2004 to estimate a series of random-effect probit equations. I find that the marginal effect of higher capital mobility on the probability of a capital flow contraction is positive and statistically significant, but very small. Having a flexible exchange rate greatly reduces the probability of experiencing a capital flow contraction. The benefits of flexible rates increase as the degree of capital mobility increases. A higher current account deficit increases the probability of a capital flow contraction, while a higher ratio of FDI to GDP reduces that probability.}, }