Effectiveness of capital controls: gates versus walls

This study analyzes the effectiveness of capital controls on international debt flows using data of 81 economies, including both advanced and emerging economies, over the period from 1995 to 2019. The analysis using the total sample shows that the impulse responses of capital controls are in the expected directions, although they are barely statistically significant. Making various distinctions among samples (such as advanced and emerging economies and pre- and post-crisis periods) does not necessarily improve our result in most cases compared to the total sample case. However, the distinction between the “gate” and “wall” economies indicates that the effectiveness of capital controls is most relevant for the “wall” emerging economies.