Capital Controls:
A 'Cure' Worse Than the Problem?

By: Forrest Capie
August 2002
Institute of Economic Affairs
ISBN: 0-255-36506-3
111 pages, 5 1/8 x 7 "
$26.50 paper original

Free capital markets played an important part in the economic integration & globalization on the 19th Century. By the end of that century, capital flows were on a remarkable scale.

The modern use of capital controls dates back to the 1930s. Professor Capie analyzes historical experience with capital controls, in Britain and elsewhere, and concludes that such controls are damaging & that there is no case for reviving them.

Capital mobility improves the worldwide allocation of resources, channeling resources to their most productive uses. Controls on capital movements result in deadweight losses & bureaucratic costs. They are difficult to remove and they damage the credibility of the government's commitment to a market economy.


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