RIEB Discussion Paper Series No.2014-21

Title

Welfare Benefits of Capital Controls:The Case of Spain

Abstract

We estimate a small open economy RBC model augmented with a simple form of financial frictions using Spanish data and Bayesian methods. The estimated model matches well with key Spanish business cycle statistics. Using the estimated model, we find that significant welfare benefits may accrue from capital controls.

Keywords

Capital controls, Welfare, DSGE, Small open economy models, Bayesian estimation

JEL Classification

F41

Inquiries

Shigeto KITANO
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059

Yoichi MATSUBAYASHI
Graduate School of Economics, Kobe University, Japan