Reinhart, Vincent R., 2000, How the machinery of international finance runs with sand in its wheels, Review of International Economics 8, 74-85. Home/Search Document Not in Database Summary Related Articles Check |
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Capital Controls During Financial Crises: The Case Of.. - Edison, Reinhart (2000) (Correct)
....interest rate (from the vantage point of a small open economy) need not follow international interest rates. 7 In principle, variation in that wedge can be introduced by the authorities to influence the exchange rate systematically. One example of this is the theoretical model of Reinhart and Reinhart (1998), who trace out the effects of one of the simplest forms of capital controls a reserve requirement. Depending on the degree of competition among financial intermediaries, Reinhart and Reinhart show that the wedge between foreign and domestic interest rates induced by the reserve requirement ....
....The general mechanism at work is that, if the flow of capital is restricted in any way, then the burden of adjustment in asset markets falls more on prices. Calvo and Rodriguez (1978) first showed how sluggishness in the flow of international assets can generate overshooting of the exchange rate. Reinhart (1998) broadened that model by incorporating equity prices and introducing three different kinds of restrictions on capital flows. The implication in Reinhart s framework is that equity price 8 volatility should increase with the imposition of controls. A shock to the desired portfolio allocation ....
Reinhart, Vincent R., 1998. "How the Machinery of International Finance Runs with Sand in its Wheels," forthcoming in Review of International Economics.
Securities Transaction Taxes And Financial Markets - Habermeier, Kirilenko (2000) (1 citation) (Correct)
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Reinhart, Vincent R., 2000, How the machinery of international finance runs with sand in its wheels, Review of International Economics 8, 74-85.
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