KDI Journal of Economic Policy

Korea Development Institute (한국개발연구원)
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The Effectiveness of Capital Controls and Macroprudential Measures

  • JUNYONG LEE (KAIST College of Business, Korea Advanced Institute of Science and Technology) ;
  • KYOUNGHUN LEE (WOORI Finance Research Institute) ;
  • FREDERICK DONGCHUHL OH (SNU Graduate School of International Studies, Seoul National University)
  • Received : 2023.08.27
  • Published : 2023.11.30
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Abstract

We review the literature on the effectiveness of capital controls and macroprudential measures. First, we explain the purposes and examples of capital controls and macroprudential policies. We then analyze various theoretical models and empirical findings from prior studies that investigate the effectiveness of each instrument. Moreover, we review several studies that directly compare the two instruments and discuss whether policymakers should implement capital controls or macroprudential measures to overcome financial crises. Finally, based on a discussion of the findings of previous studies, we suggest several possible avenues for future research.

Keywords

Acknowledgement

We would like to thank Juyoung Cheong, Kwanho Shin (the editor), and the anonymous associate editor and two reviewers for their valuable comments. Frederick Dongchuhl Oh gratefully acknowledges support from the New Faculty Startup Fund of Seoul National University. Any remaining errors are ours.

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