Shocks Transmission and Economic Stability with Capital Controls
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    Abstract:

    This paper investigates the response feature of the domestic economic to shocks of international financial market and international trade with capital controls, and the influence of deregulation on economic stability within a dynamic stochastic general equilibrium(DSGE) model for China’s economy. We find that: 1) The effect of capital controls is nearly the same as that of complete controls. Net exports will form a larger premium to interest rate parity, and the persistence of foreign exchange market shocks is relatively lower. 2) The shocks of foreign exchange market change domestic consumption and net exports via the international risk-sharing mechanism,but capital controls will suppress risk-sharing mechanism to play. Capital controls would make the trade shocks be quickly suppressed, but domestic economic variables are impacted laggedly. 3) Perfect capital mobility does significantly increase economic fluctuations; but under the current strict capital controls, moderate deregulation does not affect the economic stability; to some extent, it is beneficial to the stability of output, consumption and interest rates.

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谢绵陛.资本管制下的国际冲击传导和经济稳定[J].重庆大学学报社会科学版,2015,21(2):32~41

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  • Received:October 19,2014
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  • Online: March 03,2015
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