When are Capital Controls Effective? Evidence from Malaysia and Thailand

Juthathip Jongwanich, Maria Socorro Gochoco-Bautista, Jong-Wha Lee

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This study examines the impact of capital controls using monthly information to construct higher-frequency, quarterly indexes for Malaysia and Thailand over the period 2000-2010 in a Vector Auto-Regression (VAR) model. The results show that effectiveness of a capital control policy is not identical between Malaysia and Thailand. This could result from country-specific factors, the form of capital controls as well as degree of efficacy, which vary greatly between these two countries. Restrictions in Thailand have no significant effect on inflows but are especially effective for outflows, particularly foreign direct investment. In Malaysia, capital relaxation tends to have a significant impact on inward foreign direct investment and portfolio inflows. However, the results show that changes in capital account policies do not have a significant impact on the real exchange rate in both Malaysia and Thailand.

Original languageEnglish
Pages (from-to)619-651
Number of pages33
JournalInternational Economic Journal
Volume25
Issue number4
DOIs
Publication statusPublished - 2011 Dec 1

Fingerprint

Thailand
Capital controls
Malaysia
Foreign direct investment
Capital account
Real exchange rate
Efficacy
Vector autoregression model
Specific factors

Keywords

  • Asia
  • capital controls
  • Capital flows
  • F21
  • F32
  • F36
  • F41
  • financial integration
  • G15

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

When are Capital Controls Effective? Evidence from Malaysia and Thailand. / Jongwanich, Juthathip; Gochoco-Bautista, Maria Socorro; Lee, Jong-Wha.

In: International Economic Journal, Vol. 25, No. 4, 01.12.2011, p. 619-651.

Research output: Contribution to journalArticle

Jongwanich, Juthathip ; Gochoco-Bautista, Maria Socorro ; Lee, Jong-Wha. / When are Capital Controls Effective? Evidence from Malaysia and Thailand. In: International Economic Journal. 2011 ; Vol. 25, No. 4. pp. 619-651.
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