Political economy capital controls.
Lee, Kenneth Tze Chui.
Date of Issue2006
S. Rajaratnam School of International Studies
This paper studies the economic and political determinants of capital controls. I address two questions. One, I examine whether the prevalence of capital controls is related to a number of economic and political variables. From a public finance point of view, capital controls permit the maintenance of a significant tax base even when high tax rates are imposed because capital controls prohibit individuals from avoiding capital levies by holding foreign currency assets. With measures such as high reserve requirements in place, capital controls raise the demand for money and generate more seignorage. Two, I investigate how capital controls affect growth. From Chapter 2 (The Contribution of Capital Controls to Restor Economic Growth), I presented arguments to reject the hypothesis that capital controls reduce growth.
DRNTU::Social sciences::Political science
Nanyang Technological University