Capital Controls Re‐examined: The Case for ‘Smart’ Controls

The global financial crisis which began in east Asia in 1997 is not over, neither is the inquest into its implications for adjustment policy. In the wake of this crisis, we focus here on the role of capital controls, which formed a much publicised part of the crisis‐coping strategy in one country (Malaysia) and, less openly, were also deployed by other crisis‐afflicted countries. Evaluation so far has examined different target variables with different estimation methods, generally concentrating on efficiency and stability indicators and ignoring equity measures; it has also typically treated ‘control’ as a one‐zero dummy variable, ignoring the ‘quality’ of intervention and in particular the extent to which efficiency gains are obtained in exchange for controls. Partly because of these limitations, the literature has reached no consensus on the impact of controls; however, it is moving over towards acknowledging that the quality and type of controls is important, as well as their intensity. We propose an approach in which the government plays off short‐term political security against long‐term economic gain; the more insecure its political footing, the greater the weight it gives to political survival, which is likely to increase the probability of controls being imposed. The modelling of this approach generates a governmental ‘policy reaction function’ and an impact function for controls, which are estimated by simultaneous panel‐data methods across a sample of thirty developing and transitional countries between 1980–2003, using, for the period since 1996, the ‘new’ IMF dataset which differentiates between controls by type. We find that controls appear to cause increases in income equality, and are significantly associated with political insecurity and relatively low levels of openness to trade. They do not, in our analysis, materially influence the level of whole‐economy productivity or GDP across the sample of countries examined, although they do influence productivity in particular sectors. But the dispersion around this central finding is wide: the tendency for controls to depress productivity by encouraging rent‐seeking sometimes is, and sometimes is not, counteracted by purposive government policy actions to maintain competitiveness. Whether or not this happens is vital, on both efficiency and equity grounds. We make the case for ‘smart’ capital controls – controls which are time‐limited and contain an inbuilt incentive to increased productivity.     

On the Marginalist Theory of ‘Capital Supply’

A familiar theory of how the volume of lending depends on the rate of interest is deficient in at least two respects. First, it treats household income as independent of the rate of interest; second, it supposes the relative prices of consumption commodities to be independent of that rate.     

On the Link Between Exchange‐rate Regimes,Capital Controls and Monetary Policy Autonomy in Small European Countries, 1979–2000

We investigate international monetary‐policy transmission under different exchange‐rate and capital‐account regimes in eleven small, open economies during the 1980s and 1990s. We find no systematic link between ex‐post monetary‐policy autonomy and exchange‐rate regimes. Capital controls appear to have provided a degree of temporal insulation from foreign monetary policy shocks, though not strict autonomy. The results are consistent both with short‐term autonomy for small countries even under fixed exchange rates and an open capital account, and with long‐term dependence under flexible exchange rates and an independent stability target. Results also indicate that euro‐area market interest rates are significantly more responsive to the development of the corresponding US rate than were the previous national rates.     

Trade,Migration and Integration – Evidence and Policy Implications

This paper takes as its point of departure the unique position recently adopted by Swedish policymakers emphasising migration as a tool to increase trade. We attempt to empirically scrutinise this position. Our results demonstrate that migrants stimulate exports, especially along the extensive product margin of trade and for differentiated products, but have no significant impact on imports. This finding suggests that for small open economies where numerous immigrants are refugees, the strategy of using migration to facilitate trade may only be effective with respect to exports. This paper also contributes to the literature on trade and migration by exploiting data on gender and age, which allow us to draw inferences on the underlying impact channels. We adopt an instrumental variable approach to address the endogeneity issue due to potential reverse causality. The pattern of results is consistent with the hypothesis that migration primarily reduces fixed trade costs resulting from information and trust friction across migrant host and source countries. Importantly, the results imply that policymakers may be able to promote trade by improving immigrants’ labour market integration instead of simply being restricted to promoting more liberal immigration policies, which is generally more controversial.     

Foreign Ownership Restriction and Momentum – Evidence from Emerging Markets

This study investigates the impact of foreign investors on stock price efficiency and return predictability in emerging markets. It finds that stocks fully investible for foreign investors exhibit stronger price momentum than non‐investible stocks. The difference in momentum effects between stocks with different levels of investibility cannot be fully explained by world market risk, size, turnover, or country‐specific factors. Further tests show that fully investible stocks have no post‐earnings‐announcement drift (PEAD), and their short‐term momentum reverses over a longer horizon. These results show that the stronger momentum of highly investible stocks does not appear to be driven by foreign investors' underreaction to firm‐specific information, but is more likely to be generated by their positive feedback trading.     

The Norm Theory of Capital Structure: International Evidence*

Akerlof proposes that the norms of decision makers can bridge the gap between New Classical economic theories and conflicting empirical evidence. We apply his framework to cross‐country capital structure decision making and propose a norm theory of capital structure. Consistent with its predictions, we find that two principal components that represent the manager–subordinate relationship and the manager–environment relationship in a national culture are significantly and negatively related to the median leverage ratio at the country level. This study is among the first to provide a direct link between national culture and capital structure as made operational through managerial norms.     

Economic integration across Latin America: Evidence from labour markets, 1990–2013

Combining macroeconomic and microeconomic data and three indicators of international market integration, this paper assesses the degree to which Latin American labour markets are integrated. The results suggest that relative to East Asia, Latin American labour markets are somewhat more integrated, but considerable differences across countries persist. In addition, the evidence indicates that the degree of labour market integration across Latin American borders is significantly less than that of labour markets within the United States in two of the three indicators. These differences may suggest opportunities for efficiency gains from further labour market integration.     

马克思的货币资本积累与现实资本积累理论研究

马克思在《资本论》第三卷第30、31和32章中深刻地分析了货币资本积累与现实资本积累问题,其理论包括生息资本在有价证券形态上的积累,商业信用的积累,生息资本的积累和现实资本积累之间的关系,借贷货币资本形式的积累与现实资本积累,资本、货币、借贷资本之间的转化等.本文着力梳理、总结了马克思关于货币资本积累与现实资本积累的相关理论,为当下研究资金是否进入实体经济及为何未进入等现实问题提供较可靠的研究起点.     

Managerial Opportunism and Capital Structure Adjustments: Equity–for–debt Swap and Convertible Debt

This paper shows how capital structure adjustments through an equity–for–debt swap and convertible debt can resolve the inefficiency caused by managerial opportunism. We consider a situation in which a corporate manager's investment decision is affected by the firm's debt level. Although both an equity–for–debt swap and convertible debt can induce the self–interested manager to undertake only value–increasing projects through capital structure adjustments, there exists a significant difference between these two financial instruments. An equity–for–debt swap, which requires the agreement of both shareholders and debt holders, can change a firm's debt level only prior to the manager's investment decision. On the other hand, convertible debt, which gives debt holders a unilateral right to convert, can change a firm's debt level even after the manager's investment decision.     

RTAs' Proliferation and Trade‐diversion Effects: Evidence of the ‘Spaghetti Bowl’ Phenomenon

This paper investigates the trade‐diversion effects of regional trade agreements (RTAs), so‐called spaghetti bowl phenomenon (SBP), in multilateral trade. The SBP is due to the proliferation of RTAs. Thus, I investigate the relationship between the number of RTAs concluded by a country and the additional trade value attributed to a RTA. Using bilateral trade data in a sample of 119 countries, from 1995 to 2012, my main finding reveals a negative trade effect between them, confirming the existence of SBP in multilateral trade. However, results could not conclude the evidence of a negative effect of overlapping RTAs, involving the existence of SBP, within North–North, North–South or South–South trade. But, the additional trade value attributed to a RTA concluded with EU countries or US seems to confirm significantly a trade‐diversion effect because of the number of RTAs signed by these countries.     

Services Offshoring and its Impact on Productivity and Employment: Evidence from Germany, 1995–2006

Economists have recently recognised services offshoring as an important influence on domestic labour market outcomes. Services are of particular interest since their significance has grown in terms of both quantity and quality. Only one and a half decades ago, most services were considered non‐tradable, but the emergence and development of new information and communication technologies has made many services internationally tradable. The liberalisation of international trade in services trade has further accelerated the volume of services trade. Our econometric estimations focus on services offshoring by German manufacturing sectors. We use revised input–output data from 1995 to 2006. We first estimate the impact of services offshoring on labour productivity. We then measure the effects of services offshoring on labour demand. The results show that services offshoring increased sectoral labour productivity, but reduced German manufacturing employment. The overall results suggest that labour demand decreased over 1995–2006, because labour‐reducing productivity and substitution effects dominated labour‐augmenting scale effects from services offshoring.