Magud, Nicolas
https://scholarsbank.uoregon.edu/xmlui/handle/1794/3682
2024-03-29T02:09:25ZCapital Controls: Myth and Reality, A Portfolio Balance Approach to Capital Controls
https://scholarsbank.uoregon.edu/xmlui/handle/1794/3427
Capital Controls: Myth and Reality, A Portfolio Balance Approach to Capital Controls
Magud, Nicolas; Reinhart, Carmen M.; Rogoff, Kenneth S.
The literature on capital controls has (at least) four very serious apples-to-oranges problems: (i) There is no unified theoretical framework to analyze the macroeconomic consequences of controls; (ii) there is significant heterogeneity across countries and time in the control measures implemented; (iii) there are multiple definitions of what constitutes a "success" and (iv)
the empirical studies lack a common methodology-furthermore these are significantly "over-weighted" by a couple of country cases (Chile and Malaysia). In this paper, we attempt to
address some of these shortcomings by: being very explicit about what measures are construed
as capital controls. Also, given that success is measured so differently across studies, we sought to
"standardize" the results of over 30 empirical studies we summarize in this paper. The standardization was done by constructing two indices of capital controls: Capital Controls Effectiveness
Index (CCE Index), and Weighted Capital Control Effectiveness Index (WCCE Index). The
difference between them lies only in that the WCCE controls for the differentiated degree of
methodological rigor applied to draw conclusions in each of the considered papers. Inasmuch as
possible, we bring to bear the experiences of less well known episodes than those of Chile and
Malaysia. Then, using a portfolio balance approach we model the e®ects of imposing short-term
capital controls. We find that there should exist country-specific characteristics for capital controls to be effective. From these simple perspective, this rationalizes why some capital controls
were effective and some were not. We also show that the equivalence in effects of price- vs.
quantity-capital control are conditional on the level of short-term capital flows.
45 p.
2005-11-01T00:00:00ZOn Asymmetric Business Cycles and the Effectiveness of Counter-Cyclical Fiscal Policies
https://scholarsbank.uoregon.edu/xmlui/handle/1794/1959
On Asymmetric Business Cycles and the Effectiveness of Counter-Cyclical Fiscal Policies
Magud, Nicolas
In the presence of informational frictions and uncertainty, an investment model is developed to capture the asymmetric dynamics of business cycles. When affected by a negative shock, the economy responds differently than when hit by a positive shock, both in terms of size and recovery length. In this set up, the role for fiscal policy in smoothing the effects of business cycles fluctuations depends on the initial conditions of the economy at the time of the shock: based on the degree of fiscal fragility of the government, expansionary fiscal policy might be expansionary or contractionary in terms of output.
26 p.
2005-05-01T00:00:00ZCapital Controls: An Evaluation
https://scholarsbank.uoregon.edu/xmlui/handle/1794/1929
Capital Controls: An Evaluation
Magud, Nicolas; Reinhart, Carmen M.
The literature on capital controls has (at least) four very serious apples-to-oranges problems: (i) There is no unified theoretical framework to analyze the macroeconomic consequences of controls; (ii) there is significant heterogeneity across countries and time in the control measures implemented; (iii) there are multiple definitions of what constitutes a “success” and (iv) the empirical studies lack a common methodology—furthermore these are significantly “overweighted” by a couple of country cases (Chile and Malaysia). In this paper, we attempt to address some of these shortcomings by: being very explicit about what measures are construed as capital controls. Also, given that success is measured so differently across studies, we sought to “standardize” the results of over 30 empirical studies we summarize in this paper. The standardization was done by constructing two indices of capital controls: Capital Controls Effectiveness Index (CCE Index), and Weighted Capital Control Effectiveness Index (WCCE Index). The difference between them lies only in that the WCCE controls for the differentiated degree of methodological rigor applied to draw conclusions in each of the considered papers. Inasmuch as possible, we bring to bear the experiences of less well known episodes than those of Chile and Malaysia.
39 p.
2005-06-02T00:00:00ZExchange Rate Regime Choice and Country Characteristics: an Empirical Investigation into the Role of Openness
https://scholarsbank.uoregon.edu/xmlui/handle/1794/666
Exchange Rate Regime Choice and Country Characteristics: an Empirical Investigation into the Role of Openness
Magud, Nicolas
In choosing an exchange rate regime for a small open economy, the common wisdom (Friedman (1953), Meade (1950)) calls for a °oating regime to outperform a peg because of the ability of the former to cope with relative price changes without major output effects. With balance sheet effects in mind, doubts have been raised about it, though. I test for this, using a near VAR approach. The 32 country sample for the period 1980-2001 was split according to the degree of openness of the economy. The results show that for relatively open economies the common wisdom holds; on the contrary, for relatively closed economies it does not. In fact, the evidence documents that to absorb real shock, fixed exchange rate regimes perform better for relatively closed economies, while flexible exchange rate regimes do a better job for relatively open economies.
27 p.
2004-10-20T00:00:00Z