TY - BOOK ID - 84657408 TI - Capital Flow Deflection AU - Giordani, Paolo. AU - Ruta, Michèle. AU - Weisfeld, Hans. AU - Zhu, Ling. PY - 2014 SN - 1498353231 1498317499 1498396178 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Capital movements KW - International trade KW - Capital flight KW - Capital flows KW - Capital inflow KW - Capital outflow KW - Flight of capital KW - Flow of capital KW - Movements of capital KW - Balance of payments KW - Foreign exchange KW - International finance KW - Econometric models. KW - Banks and Banking KW - Exports and Imports KW - International Investment KW - Long-term Capital Movements KW - Interest Rates: Determination, Term Structure, and Effects KW - International economics KW - Finance KW - Capital controls KW - Capital inflows KW - Real interest rates KW - Capital outflows KW - Financial services KW - Interest rates KW - South Africa UR - https://www.unicat.be/uniCat?func=search&query=sysid:84657408 AB - This paper focuses on the coordination problem among borrowing countries imposing controls on capital infl ows. In a simple model of capital flows and controls, we show that inflow restrictions distort international capital flows to other countries and that, in turn, such capital flow deflection may lead to a policy response. We then test the theory using data on inflow restrictions and gross capital inflows for a large sample of developing countries between 1995 and 2009. Our estimation yields strong evidence that capital controls deflect capital flows to other borrowing countries with similar economic characteristics. Notwithstanding these strong cross-border spillover effects, we do not find evidence of a policy response. ER -