A growing recent theoretical literature advocates the use of prudential capital control policy, that is, the tightening of restrictions on cross-border capital flows during booms and the relaxation thereof during recessions. We examine the behavior of capital controls in a large number of...

Countercyclical country interest rates have been shown to be both a distinctive characteristic and an important driving force of business cycles in emerging markets. In order to capture this, most business cycle models of emerging economies have nonetheless relied on ad hoc and exogenous...