Capital Controls and Trade Liberalization in a Monetary Economy (Electronic book text)

For many years, the order and speed of economic liberalization have been discussed, for example, by Corden (1987), Frenkel (1982), Edwards (1984 and 1989b), and McKinnon (1973 and 1982). The liberalization policy consists of setting the sequence of trade and capital account liberalization. Interest in this issue was stimulated by the experiences of Argentina, Chile, and Uruguay in the 1970s where some liberalization of both kinds took place in various orders. In Argentina and Uruguay capital account liberalization came first and in Chile trade liberalization.2 To understand the impact of various liberalization policies, it is important to address the question of the effects of capital controls during trade liberalization.3