What Lessons Can Asia Draw from Capital Controls in Brazil During 2008-2012?

Driven by waves of foreign capital inflows and outflows, Indonesia, the Republic of Korea, and Thailand — among several other emerging markets — have resorted to capital control policy since 2006. Are capital controls effective? Controls on capital inflows have been experiencing a renaissance since 2008, with several prominent Asian and Latin American countries implementing them. This paper focuses on Brazil, which instituted five changes in its capital account regime over 2008-2011. It concludes that the effectiveness of capital controls should be viewed on a case-by-case basis, together with the political economy considerations, and other policy tools, i.e., foreign exchange