Capital Inflows x Financial Markets (Carvalho & Garcia)

Ineffective controls on capital inflows under sophisticated financial markets: Brazil in the nineties by Bernardo S. de M. Carvalho and Márcio G. P. Garcia published by NBER. “We analyze the Brazilian experience in the 1990s to assess the effectiveness of controls on capital inflows in restricting financial inflows and changing their composition towards long term flows. The main conclusion is that controls on capital inflows, while thay may be desirable, are of very limited effectiveness under sophisticated financial markets.”