A_ban_on_capital_controls_is - Page 1 3 of 3 DOCUMENTS...

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Page 1 3 of 3 DOCUMENTS Copyright 2003 The Financial Times Limited Financial Times (London,England) March 17, 2003 Monday London Edition 1 SECTION: COMMENT & ANALYSIS ; Pg. 21 LENGTH: 777 words HEADLINE: A ban on capital controls is a bad trade-off: JAGDISH BHAGWATI and DANIEL TARULLO: BYLINE: By JAGDISH BHAGWATI and DANIEL TARULLO BODY: The US Congress will next month hold hearings on the free trade agreements recently negotiated by the US with Chile and Singapore. There is little overall political opposition to these bilateral agreements. The hearings, though, will focus on a matter of great importance: the inclusion of res-trictions on the use of capital controls. Chile and Singapore, both models of sound economic policy management by emerging market countries, res- isted an obligation not to use capital controls under any circumstances. But in the end, they compromised. We believe their objections were sound; the compromises are not. The restrictions are bad financial policy, bad trade policy, and bad foreign policy. There are parallels between the unrestricted flow of capital and free trade: interference with either leads to the loss of economic efficiency and constraints on economic freedom. And capital controls, like trade restrictions, can be a
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This note was uploaded on 05/19/2008 for the course ILRIC 4330 taught by Professor Turnerl during the Spring '06 term at Cornell.

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A_ban_on_capital_controls_is - Page 1 3 of 3 DOCUMENTS...

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