Understanding the Drivers of Capital Controls: Macroeconomic vs Financial Stability in Emerging Market Economies

This study analyzes the role of macroeconomic stability goals and financial stability goals in determining capital controls, such as inflow and outflow controls in emerging market economies over the period 2000Q1-2022Q4. The findings reveal that while controls on short-term capital inflows are driven by macroeconomic stability goals like output growth and output volatility, controls on short-term outflows respond to the financial stability goal, such as asset prices.