Đây là bài luận tiếng anh dành cho giáo viên, học sinh tham khảo để rèn luyện kỹ năng viết tiếng anh tốt hơn. | Capital Controls and Interest Rate Parity Evidences from China 1999-2004 March 2005 Li-Gang Liu and Ichiro Otani Abstract This paper shows that deviations estimated from the uncovered interest rate parity condition present strong unstationarity and persistency thus indicating China s capital controls is still effective in driving a wedge between onshore and offshore returns. Similar results are also obtained from covered interest rate parity condition. Our findings also demonstrate that there is no evidence of money market integration with Hong Kong. However the deviation also shows signs of moderation over time because of increased pace of capital account liberalization. Key Words Capital Controls Interest Rate Parity Financial Integration JEL Classification F31 F36 The authors are senior fellow and international consulting fellow Research Institute of Economy Trade and Industry respectively. The paper is prepared for the RIETI BIS BOC Conference on Globalization of Financial Services in China Implications for Capital Flows Supervision and Monetary Policy on Saturday 19th 2005. The views expressed here are those of the authors alone and do not represent the views of the institution with which they are affiliated. I. Introduction Efficacy and effectiveness of capital controls have gained renewed interests after Malaysia re-imposed controls on capital flows at the height of the 1997-98 Asian financial crises. The Mundell Trilemma suggest that policy makers can only choose two out of the three macroeconomic policy objectives . independent monetary policy stable exchange rate and freedom of capital flows to maintain fundamental policy consistency. In the Malaysian case the freedom of capital flows has been sacrificed for the sake of independent monetary policy and the stable exchange rate. Although the verdict is still out regarding whether capital controls have facilitated Malaysia s rapid recovery from the crisis IMF 2000 recent empirical evidences do show that .
