One cost of the Chilean capital controls: Increased financial constraints for smaller traded finns

• 成果类型: Article
• 署名作者: Forbes, Kristin J.
• 署名单位: Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2006.03.005
• 发表日期: 2007
• 页码: 294-323
• 关键词: Capital controls; Encaje; chile; firm-financing constraints

摘要

There is growing support for taxes on short-term capital inflows in emerging markets, such as the encaje adopted by Chile from 1991 to 1998. This paper assesses whether the Chilean capital controls increased financial constraints for different-sized, publicly-traded firms. It uses an Euler-equation framework and shows that during the encaje, smaller traded firms experienced significant financial constraints. These constraints decreased as firm size increased. Both before and after the encaje, however, smaller firms did not experience significant financial constraints, and there is no relationship between firm size and financial constraints. Although Chilean-style capital controls may yield some benefits, any such benefits should be weighed against this cost of increasing financial constraints for small and mid-sized firms. (C) 2006 Elsevier B.V. All rights reserved.