According to an article in the Wall Street Journal in 2016: Small changes in the yuan have
Question:
According to an article in the Wall Street Journal in 2016:
Small changes in the yuan have touched off big swings in markets across the world, and the dollar has shot up against just about every currency. Amid the turmoil, financial- and economic-policy makers are advocating a tactic once anathema to all but the most mismanaged economies: capital controls.
a. What are capital controls?
b. Why might capital controls have been seen as a more desirable policy in 2016 than 10 years earlier?
c. Why does the article say that a government’s using capital controls was once considered an indication that an economy was being mismanaged? Do the downsides to capital controls still exist? Briefly explain.
Step by Step Answer:
Money, Banking, and the Financial System
ISBN: 978-0134524061
3rd edition
Authors: R. Glenn Hubbard, Anthony Patrick O'Brien