Capital Controls and Firm Performance: The Effects of the Chilean Encaje

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dc.creator Andreasen, Eugenia
dc.creator Bauducco, Sofía
dc.creator Dardati, Evangelina
dc.date 2018-01-11T21:44:24Z
dc.date 2018-01-11T21:44:24Z
dc.date 2018
dc.identifier Andreasen, E., Bauducco, S., & Dardati, E. (2018). Capital Controls and Firm Performance: The Effects of the Chilean Encaje. Working paper;N° 2018/04, Santiago de Chile: CAF. Retrieved from http://scioteca.caf.com/handle/123456789/1153
dc.identifier http://scioteca.caf.com/handle/123456789/1153
dc.identifier.uri http://scioteca.caf.com/handle/123456789/1153
dc.description This paper studies the effects of the capital controls imposed by Chile between 1991 and 1998, i.e. the Chilean encaje, on firms' production, investment and exporting decisions. We use a general equilibrium model with heterogeneous firms and financial constraints to illustrate the mechanism by which capital controls on inflows affect firm-level dynamics and international trade. We find that capital controls on inflows depress the local economy due to the credit restriction, reducing aggregate production, investment and domestic sales. This reduced level of domestic activity increases the firm's incentives to export, increasing both the level of exports and the share of exporters. Most of these effects are exacerbated for firms in more capital-intensive sectors. Using data from the Chilean Encuesta Nacional Industrial Anual (ENIA) we empirically corroborate the conclusions and insights of the theoretical model.
dc.language en
dc.publisher CAF
dc.publisher Santiago de Chile
dc.relation Working paper;N° 2018/04
dc.rights CC-BY-NC
dc.rights http://creativecommons.org/licenses/by-nc/4.0/
dc.subject Comercio internacional
dc.subject Economía
dc.subject Finanzas públicas
dc.subject Sector financiero
dc.title Capital Controls and Firm Performance: The Effects of the Chilean Encaje
dc.type workingPaper
dc.coverage América del sur

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