This paper develops a simple theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite … the welfare of its representative agent, while the other country is passive. We show that capital controls are not guided … international capital flows converge to zero. Although our theory emphasizes interest rate manipulation, the country's net financial …

This paper develops a simple theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite … the welfare of its representative agent, while the other country is passive. We show that capital controls are not guided … international capital flows converge to zero. Although our theory emphasizes interest rate manipulation, the country's net financial …

agreement and capital liberalisation on a country’s welfare. Using more comprehensive datasets on inflow and outflow capital … control, we find significant and mixed capital control effects on countries’ welfare. The model also signifies consistent … negative effects of the trade agreement on welfare coupled with proof of capital control’s reduction effect on the trade …

raised welfare substantially in the ROW, but at the expense of much lower U.S. welfare. Given the U.S.'s goal of keeping … capital within these countries to preserve their stability during this period, we interpret lower U.S. welfare due to Bretton …