On the effectiveness of capital controls: The experience of Colombia during the 1990s

This paper analyzes the effectiveness of capital controls in Colombia. The evidence presented points towards a relative inability of the measures adopted to reduce the level of capital inflows. Nonetheless, the evidence suggests that non-remunerated deposits have been successful in inducing a recomposition of foreign liabilities in favor of long-term maturities. It is likely that this is a positive result as it has made the country less vulnerable to a reversal in capital flows. In this sense, controls may be viewed as an effective way of internalizing the negative externality imposed by short term maturities. (C) 1997 Elsevier Science B.V.