Q2. How long do they find the effects of capital controls?
they consider net, rather than gross inflows, and find that the effects of capital controls only last for about six months.
Q3. What is the effect of capital controls on inflows and outflows?
controls affect capital flows only through outflows, with little or no discernable impact on inflows—that is, countries appear to be able to prevent capital from leaving the economy, but much less capable of keeping capital out.
Q4. What is the effect of capital controls on the outflow of debt securities?
But these restrictions on the outflow of debt securities may also have an indirect effect on the outflow of equity and FDI, perhaps increasing these later flows as individuals and firms switch from debt to equity as a way of moving capital out of the country.
Q5. What are the main reasons for the use of capital controls?
The first is concern over the impact of large exchange rate movements, either bouts of substantial appreciation or depreciation of the currency, on the real and financial economy, and the hope that various forms of capital controls can help offset these exchange rate pressures.
Q6. What is the direct effect of restrictions on the outflow of debt securities?
The direct effect in this case is the impact of restrictions on the outflow of debt securities (with the estimated effect at -0.955 given in the row labeled “Debt In/Out-flow Control”).
Q7. What is the main positive effect of equity outflows on financial development?
Financial development, on the other hand, exhibits a complex pattern: measured by stock market capitalization, its main positive effect is via the equity outflow subcategory, while when measured by private credit, it is significantly positively associated with both debt and equity outflows.
Q8. What is the effect of capital controls on outflows?
Capital is fungible and it is possible that the reaction to more intense controls on outflows is offset by a reduction of inflows into the country.