Capital controls in the 21st century

CEPR Policy Insight No 72

Barry Eichengreen, Andrew K Rose

Since the global financial crisis of 20082009, opposition to the use of capital controls has weakened, and some economists have advocated their use as a macro-prudential policy instrument. This CEPR Policy Insight shows that capital controls have rarely been used in this way in the past. Rather than moving with short-term macroeconomic variables, capital controls have tended to vary with financial, political, and institutional development. This may be because governments have other macroeconomic policy instruments at their disposal, or because suddenly imposing capital controls would send a bad signal.