The IMF’s evolving position on capital controls
The IMF once advocated the removal of all controls on outflows and inflows in the heydays of the Washington Consensus in the 1990s. The Asian Crisis of 1997-1998, however, initiated a slow process of conversion that culminated with the IMF’s recent decision to explicitly and openly support the imposition of controls on capital inflows (euphemistically naming them ‘capital flow management policies’). The basic premise of this new IMF stance on capital controls is that controls should be imposed when countries are facing a capital inflow surge and after all other policy alternatives have been exhausted1. Given the IMF’s new stance, we ask in Jinjarak et al. (2012) whether capital controls on inflows are effective.