ECONOMIC-EFFECTS AND STRUCTURAL DETERMINANTS OF CAPITAL CONTROLS

The effects and determinants of capital controls are studied using pan el data for 61 countries. Capital controls are more likely in countrie s with lower income, a large government, and a central bank with limit ed independence. Other determinants of controls include the exchange r ate regime, current account imbalances, and the degree of openness of the economy. Capital controls are found to be associated with higher i nflation and lower real interest rates. No robust correlation is found between our measures of controls and economic growth, although there is evidence that countries with large black market premiums on foreign exchange grow more slowly.