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Capital controls were an integral part of the Bretton Woods system which emerged after World War II and lasted until the early 1970s. This period was the first time capital controls had been endorsed by mainstream economics. Capital controls were relatively easy to impose, in part because international capital markets were less active in ...
As capital controls are reduced, the modern world has begun to look a lot less like the world modelled by Heckscher and Ohlin. It has been argued that capital mobility undermines the case for free trade itself, see: Capital mobility and comparative advantage Free trade critique. Capital is mobile when: There are limited exchange controls
Traditionally, covered interest rate parity (CIRP) was found to hold when there is open capital mobility and limited capital controls, and this finding is confirmed for all currencies freely traded in the present day. One such example is when the United Kingdom and Germany abolished capital controls between 1979 and 1981.
Prudential capital controls are typical ways of prudential regulation that takes the form of capital controls and regulates a country's capital account inflows. Prudential capital controls aim to mitigate systemic risk , reduce business cycle volatility, increase macroeconomic stability, and enhance social welfare .
Both advanced and emerging nations adopted controls; in basic theory it may be supposed that large inbound investments will speed an emerging economy's development, but empirical evidence suggests this does not reliably occur, and in fact large capital inflows can hurt a nation's economic development by causing its currency to appreciate, by ...
Optimal capital income taxation is a subarea of optimal tax theory which studies the design of taxes on capital income such that a given economic criterion like utility is optimized. [ 1 ] Some have theorized that the optimal capital income tax is zero.
Bertram Schefold (born 28 December 1943 in Basel) is a Swiss economist and an Economics professor at the Goethe University in Frankfurt am Main specializing in economic theory with a particular focus on capital theory and the history of economic thought.
The two main capital structure theories as taught in corporate finance textbooks are the Pecking order theory and the Trade-off theory.The two theories make some contradicting predictions and for example Fama and French conclude: [3] "In sum, we identify one scar on the tradeoff model (the negative relation between leverage and profitability), one deep wound on the pecking order (the large ...