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Are Capital Controls Effective? Firm-level Evidence from Brazil

By: Laura Alfaro, Anusha Chari and Fabio Kanczuk
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Abstract

Capital controls are back in fashion. This column discusses new firm-level evidence from Brazil showing that capital controls segment international financial markets, reduce external financing, and lower firm-level investment. They disproportionately affect small, non-exporting firms, especially those more dependent on external finance. This suggests that macro-finance models focusing on aggregate variables are missing an important dimension by abstracting from firm-level heterogeneity.

Citation

Alfaro, Laura, Anusha Chari, and Fabio Kanczuk. "Are Capital Controls Effective? Firm-level Evidence from Brazil." Vox, CEPR Policy Portal (January 22, 2015).

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Laura Alfaro

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