On the effectiveness of capital controls: The experience of Colombia during the 1990s

• Published in: Journal of development economics Vol. 54; no. 1; pp. 27 - 57
• Main Authors: Cárdenas, Mauricio, Barrera, Felipe
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01-10-1997; Elsevier; North-Holland Pub. Co; Elsevier Sequoia S.A
• Series: Journal of Development Economics
• Subjects: Capital controls; Capital flow; Capital flows; Capital mobility; Capital movement; Capital tax; Colombia; Development economics; Economic models; Economic policy; Economic theory; Exchange rates; Externalities; Foreign exchange controls; Foreign exchange rates; Interest rates; Macroeconomics; Statistical analysis; Studies; Taxation; Tobin taxes; Colombia; F32; Tobin taxes; Capital controls; Capital flows; F34
• ISSN: 0304-3878; 1872-6089
• DOI: 10.1016/S0304-3878(97)00028-X

This paper analyzes the effectiveness of capital controls in Colombia. The evidence presented points towards a relative inability of the measures adopted to reduce the
level of capital inflows. Nonetheless, the evidence suggests that non-remunerated deposits have been successful in inducing a
recomposition of foreign liabilities in favor of long-term maturities. It is likely that this is a positive result as it has made the country less vulnerable to a reversal in capital flows. In this sense, controls may be viewed as an effective way of internalizing the negative externality imposed by short term maturities.