Capital Controls, Political Institutions, and Economic Growth: A Panel and Cross Country Analysis

Author(s):

Source:
    Journal:Quarterly Journal of Political Science
    ISSN Print:1554-0626,  ISSN Online:1554-0634
    Publisher:Now Publishers
    Volume 2 Number 4,
Pages: 18 (307-324)
DOI: 10.1561/100.00006044

Abstract: Statistical studies on the effects of capital controls on growth have generally yielded insignificant results. In this paper, we show that capital controls negatively affect growth in authoritarian countries, while growth in democratic countries is insignificantly affected. We also show that the adverse effects of capital controls likely pass through the efficiency of investment. Our findings suggest that policy makers should take careful account of the political context when considering the decision to impose capital controls.

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