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Capital controls and recovery from the financial crisis of the 1930s
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Mitchener , Kris James and Wandschneider , Kirsten (2013) Capital controls and recovery from the financial crisis of the 1930s. Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2013 (Number 132).
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Text (Working paper)
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
We examine the first widespread use of capital controls in response to a global or regional financial crisis.
In particular, we analyze whether capital controls mitigated capital flight in the 1930s and assess their
causal effects on macroeconomic recovery from the Great Depression. We find evidence that they
stemmed gold outflows in the year following their imposition; however, time-shifted, difference-indifferences
(DD) estimates of industrial production, prices, and exports suggest that exchange controls did
not accelerate macroeconomic recovery relative to countries that went off gold and floated. Countries
imposing capital controls also appear to perform similar to the gold bloc countries once the latter group of
countries finally abandoned gold. Time series regressions further demonstrate that countries imposing
capital controls refrained from fully utilizing their newly acquired monetary policy autonomy. Even so,
capital controls remained in place as instruments for manipulating trade flows and for preserving foreign
exchange for the repayment of external debt.
Item Type: | Working or Discussion Paper (Working Paper) |
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Alternative Title: | |
Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Faculty of Social Sciences > Economics |
Library of Congress Subject Headings (LCSH): | Capital movements , Depressions -- 1929 , Stock Market Crash, 1929, Financial crises , Macroeconomics -- Econometric models |
Series Name: | CAGE Online Working Paper Series |
Publisher: | Department of Economics, University of Warwick |
Place of Publication: | Coventry, UK |
Official Date: | June 2013 |
Volume: | Volume 2013 |
Number: | Number 132 |
Number of Pages: | 37 |
Status: | Not Peer Reviewed |
Publication Status: | Published |
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