Capital Control Reconsidered: Financialisation and Economic Policy

Kalim Siddiqui, Phil Armstrong

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

We consider capital controls and their impact on selected countries, providing a critique of IMF policy. We show how the warning signs of the 1970s were ignored and the consequences became apparent during the ensuing period of neoliberal hegemony. We contend that promoting increased capital mobility is counterproductive as it reduces macroeconomic ‘policy space’. We introduce a development of the international policy ‘trilemma’ in the form of a variant of the idea of the ‘quadrilemma’. We suggest that, in most cases, the key policy driving economic growth is fiscal policy but it may be that its unconstrained use (and that of monetary policy) is not possible either under fixed exchange rates or when free capital mobility exists; a nation may face a ‘demi-quadrilemma’. We contend that, in practice, a country can only adopt ‘two from four’; if it chooses to retain free use of monetary and fiscal policy, it must sacrifice both fixed exchange rates and capital mobility. We advocate the rejection of fixed exchange rates and free capital mobility allowing the retention of requisite monetary and fiscal policy space, and that a multinational approach to the capital control policy would effectively contribute to a growth and development strategy.
LanguageEnglish
Pages713-731
Number of pages19
JournalInternational Review of Applied Economics
Volume32
Issue number6
Early online date25 Sep 2017
DOIs
Publication statusPublished - 2018

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Capital controls
Financialization
Economic policy
Capital mobility
Fixed exchange rates
Monetary and fiscal policy
Warning
Development strategy
Fiscal policy
Growth strategy
Multinationals
Hegemony
International policy
Monetary policy
Economic growth
Growth and development
Macroeconomic policy

Cite this

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Capital Control Reconsidered : Financialisation and Economic Policy. / Siddiqui, Kalim; Armstrong, Phil.

In: International Review of Applied Economics, Vol. 32, No. 6, 2018, p. 713-731.

Research output: Contribution to journalArticle

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