European Parliament Library

Collateral Damage :, Exchange Controls and International Trade, Zhiwei Zhang, Shang-Jin Wei

Collateral Damage :, Exchange Controls and International Trade, Zhiwei Zhang, Shang-Jin Wei
While new conventional wisdom warns that developing countries should be aware of the risks of premature capital account liberalization, the costs of not removing exchange controls have received much less attention. This paper investigates the negative effects of exchange controls on trade. To minimize evasion of controls, countries often intensify inspections at the border and increase documentation requirements. Thus, the cost of conducting trade rises. The paper finds that a one standard-deviation increase in the controls on trade payment has the same negative effect on trade as an increase in tariff by about 14 percentage points. A one standard-deviation increase in the controls on FX transactions reduces trade by the same amount as a rise in tariff by 11 percentage points. Therefore, the collateral damage in terms of foregone trade is sizable
Bibliography note
Includes bibliographical references (p. 14-15)
international or intergovernmental publication
Literary Form
non fiction
Main title
Collateral Damage :
Nature of contents
Oclc number
Responsibility statement
Zhiwei Zhang, Shang-Jin Wei
Series statement
IMF Working Papers
Sub title
Exchange Controls and International Trade
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Exchange Controls: Some Basic Patterns; 1. Evolutions of Restriction Indices; 1a. Summary Statistics for Restriction Indices; 1b. Correlations of the Control Indices, Tariff, and NTB Index; 2. Control Indices in Selected Countries; III. Statistical Analysis; 2. Benchmark Regressions; 3. Adding Time-varying Price Indices; 4. Developing Countries; 5. Additional Controls: Corruption and Trade Openness; 6. Finer Classification of Exchange Controls; 7. Emerging Market Economies during 1996-99; IV. Concluding Remarks1. Exchange Controls: Source, Measurement, and Indices 2. List of Countries in the Sample; References; Footnotes
Other version
Mapped to