Capital Controls in a Time of Crisis

Grabel, Ilene

doi:10.1007/978-3-319-41219-1_5

Cited by 5 publications

(7 citation statements)

References 27 publications

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“…Chwieroth, 2015;Moschella, 2014;Gallagher, 2014).' (Grabel 2016: 2) 11 Mitchell (2016b) summarises his perception of an initial position consistent with the tenets of MMT as: '1.The imposition of country-by-country capital controls can help eliminate the destructive macroeconomic impacts of rapid inflows or withdrawals of financial capital but may not be sufficient. If we adopt a progressive view that the only productive role of the financial markets should be to advance the social welfare of the citizens then it is likely that a whole range of financial transactions, which drive cross-border capital flows, should be made illegal rather than controlled through capital restrictions.…”

Section: Discussionmentioning

confidence: 99%

“…They also find that these three types of measures enhanced monetary policy autonomy, that increasing their restrictiveness in the run-up to the global crisis reduced the growth decline during the crisis (and thereby enhanced crisis resilience), and that countries that used these measures experienced less overheating during post-crisis recovery when a new surge in capital inflows occurred'. (Grabel. 2016;29) At this point, we might note that the neo-liberal approach has led to the ascendancy of international finance over national democracy.…”

Section: A Critique Of the Mainstream Argumentmentioning

confidence: 99%

“…The contention that national governments should adapt policy on capital controls according to the circumstances they face, whilst still taking account of international consequences is noted by Grabel (2016). 'In my view it is critical that efforts be made to maintain and expand the opportunity that has emerged in the crisis environment for national policymakers to experiment with capital controls and to adjust them as circumstances warrant.…”

Section: (I) a Quadriliemmamentioning

confidence: 99%

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Capital control reconsidered: financialisation and economic policy

Siddiqui

Armstrong

2017

International Review of Applied Economics

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First, we examine the nature of capital controls and their impact on selected countries. We provide a critique of IMF policy and an examination of its results in practice. We then show how the warning signs of the 1970s were ignored and the consequences became apparent during the ensuing period of neoliberal hegemony. We present a summary of the neo-classical arguments concerning the role of increased capital mobility in promoting growth and development. Our objectives are first, to show that, in practice, it may be that promoting increased capital mobility is counterproductive as it reduces macroeconomic 'policy space' and restricts the state's ability to use fiscal and monetary policy to enhance welfare. Second, we introduce and use a development of the international policy 'trilemma' in the form of a variant of the idea of the 'quadrilemma' 1 in order to underpin our policy suggestions. We suggest that, in most cases, the key policy driver in the promotion of economic growth is fiscal policy but it may be that its unconstrained use (and that of monetary policy) is not possible either under fixed exchange rates or when free capital mobility exists; in fact, a nation may face a 'demiquadrilemma. We contend that, in practice, a country can only adopt 'two from four'; if it chooses to retain free use of monetary and fiscal policy it must sacrifice both fixed exchange rates and capital mobility. We hope to demonstrate that a nation facing the 'demi-quadrilemma' should discard both the use of fixed exchange rates and the acceptance of free capital mobility in order to allow the retention of requisite monetary and fiscal policy space and that a multinational approach to the design of capital control policy would be an effective contributor to a strategy designed to enhance growth and development.

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Section: Discussionmentioning

confidence: 99%

Section: A Critique Of the Mainstream Argumentmentioning

confidence: 99%

Section: (I) a Quadriliemmamentioning

confidence: 99%

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Capital control reconsidered: financialisation and economic policy

Siddiqui

Armstrong

2017

International Review of Applied Economics

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“…Controls were widely used prior to the 1970s but the pressures of economic integration and trade liberalization, championed by the Bretton Woods institutions, reduced their usage (Johnson and Mitton 2003). Nevertheless, emerging countries still implement controls to manage crises for which conventional policies are ineffective (Grabel 2016). For instance, the government of Nigeria recently implemented severe foreign exchange restrictions to Investment Climate Constraints as Determinants of Political Tie Intensity… arrest the free fall of the Naira.…”

Section: Control Constraints and Political Tie Intensitymentioning

confidence: 99%

“…Control constraints are also prevalent in Ghana. Institutional weaknesses in emerging countries often create macroeconomic problems (Acemoglu et al 2003) which require drastic policy measures (Grabel 2016). In Ghana, weak macroeconomic fundamentals in 2014 caused the government and the central bank to impose foreign exchange controls to stem the free fall of the local currency.…”

mentioning

confidence: 99%

Investment Climate Constraints as Determinants of Political Tie Intensity in Emerging Countries: Evidence from Foreign Firms in Ghana

Liedong

Frynas

2018

Manag Int Rev

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Foreign firms in emerging countries face various institutionally-driven challenges. Nonmarket strategy scholars argue that these challenges incite corporate political activity. Consequently, researchers have explored the influence of institutional factors on the choice and extent of political strategies. However, not much is known about how investment climate constraints affect the political ties of foreign firms in contexts other than US, Europe and Asia. Drawing on institutional theory, we propose that firms' exposure to administrative and control constraints as well as the presence of public affairs (PA) functions will lead to political tie intensification. We test our propositions using data from foreign firms operating in Ghana, and find that whereas control constraints strengthen political ties, administrative constraints weaken these ties. The findings also suggest that PA functions and political ties can be substitutes, not complements, depending on the institutional contingencies. Altogether, our study enhances knowledge and understanding of how institutional environments and organizational structures affect the political behaviour of foreign firms in emerging countries.

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Beware of Financialization!

Nölke¹

Critical Junctures in Mobile Capital

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Capital Controls in a Time of Crisis

Cited by 5 publications

References 27 publications

Capital control reconsidered: financialisation and economic policy

Capital control reconsidered: financialisation and economic policy

Investment Climate Constraints as Determinants of Political Tie Intensity in Emerging Countries: Evidence from Foreign Firms in Ghana

Beware of Financialization!

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