Capital Control Taxes in an Emerging Market Economy

Oğuz Kaan Karakoyun

Makale detayları

Capital Control Taxes in an Emerging Market Economy

Yazarlar:

Oğuz Kaan Karakoyun

Yayıncı:

Ahmet Arif EREN

Ana Başlıklar:

Makroekonomik Teori | Konjonktür Dalgalanmaları

Dergi:

Fiscaoeconomia Vol.8 Issue 2, pp.564-589

Belge Tipi:

Makale

Yayın Tarihi:

5/2024

Belge Dili:

İngilizce

Document ID (Org No.):

2001317934

pISSN:

2564-7504

Anahtar kelimeler:

Özet:

 Historically, Emerging Markets EMs that own foreign debt and exhibit a high degree of dollarization have demonstrated vulnerability to a range of both real and financial shocks. Governments often use a range of capital control measures, particularly in nations burdened with external debt, with the aim of mitigating sudden swings in both inflows and outflows of capital. These policies are implemented to lessen exchange rate volatility and prevent dollarization. This study employs second moments analysis, impulse response functions and the welfare analysis to investigate the impact of a tax policy that restricts international capital flows on several macroeconomic variables in an emerging economy. A dynamic stochastic general equilibrium DSGE model is employed to examine the impact of the tax imposed on foreign borrowing on the economy, including both real shocks such as technology and growth, as well as financial shocks such as country risk premium. The findings of the study indicate that capital control taxes have a diminishing effect on the variability of significant macroeconomic variables, such as investment and consumption, when imposed at lower levels. Conversely, these taxes exhibit a stabilizing impact on the volatility of the trade balance-to-output ratio when implemented at higher levels. Moreover, quantitative evidence reveals that country risk premium shocks exert a substantial influence on variations in both the trade balance-to-output ratio and the level of investment, accounting for around 25 and 50 of the fluctuations, respectively. Finally, the existence of such a taxation enhances the intertemporal utility function at the steady state and reduces its volatility in the case of technology and growth shocks.

 Historically, Emerging Markets EMs that own foreign debt and exhibit a high degree of dollarization have demonstrated vulnerability to a range of both real and financial shocks. Governments often use a range of capital control measures, particularly in nations burdened with external debt, with the aim of mitigating sudden swings in both inflows and outflows of capital. These policies are implemented to lessen exchange rate volatility and prevent dollarization. This study employs second moments analysis, impulse response functions and the welfare analysis to investigate the impact of a tax policy that restricts international capital flows on several macroeconomic variables in an emerging economy. A dynamic stochastic general equilibrium DSGE model is employed to examine the impact of the tax imposed on foreign borrowing on the economy, including both real shocks such as technology and growth, as well as financial shocks such as country risk premium. The findings of the study indicate that capital control taxes have a diminishing effect on the variability of significant macroeconomic variables, such as investment and consumption, when imposed at lower levels. Conversely, these taxes exhibit a stabilizing impact on the volatility of the trade balance-to-output ratio when implemented at higher levels. Moreover, quantitative evidence reveals that country risk premium shocks exert a substantial influence on variations in both the trade balance-to-output ratio and the level of investment, accounting for around 25 and 50 of the fluctuations, respectively. Finally, the existence of such a taxation enhances the intertemporal utility function at the steady state and reduces its volatility in the case of technology and growth shocks.

 Historically, Emerging Markets EMs that own foreign debt and exhibit a high degree of dollarization have demonstrated vulnerability to a range of both real and financial shocks. Governments often use a range of capital control measures, particularly in nations burdened with external debt, with the aim of mitigating sudden swings in both inflows and outflows of capital. These policies are implemented to lessen exchange rate volatility and prevent dollarization. This study employs second moments analysis, impulse response functions and the welfare analysis to investigate the impact of a tax policy that restricts international capital flows on several macroeconomic variables in an emerging economy. A dynamic stochastic general equilibrium DSGE model is employed to examine the impact of the tax imposed on foreign borrowing on the economy, including both real shocks such as technology and growth, as well as financial shocks such as country risk premium. The findings of the study indicate that capital control taxes have a diminishing effect on the variability of significant macroeconomic variables, such as investment and consumption, when imposed at lower levels. Conversely, these taxes exhibit a stabilizing impact on the volatility of the trade balance-to-output ratio when implemented at higher levels. Moreover, quantitative evidence reveals that country risk premium shocks exert a substantial influence on variations in both the trade balance-to-output ratio and the level of investment, accounting for around 25 and 50 of the fluctuations, respectively. Finally, the existence of such a taxation enhances the intertemporal utility function at the steady state and reduces its volatility in the case of technology and growth shocks.

 Tarihsel olarak, dış borcu olan ve yüksek derecede dolarizasyon sergileyen Yükselen Piyasalar EMs, hem reel hem de finansal şoklara karşı kırılganlık göstermişlerdir. Hükümetler, özellikle dış borç yükü altında olan ülkelerde, sermayenin hem giriş hem de çıkışlarındaki ani dalgalanmaları azaltmak amacıyla sıklıkla bir dizi sermaye kontrol önlemi kullanmaktadırlar. Bu politikalar döviz kuru oynaklığını azaltmak ve dolarizasyonu önlemek amacıyla uygulanmaktadır. Bu çalışma, yükselen bir ekonomide uluslararası sermaye akışlarını kısıtlayan bir vergi politikasının çeşitli makroekonomik değişkenler üzerindeki etkisini araştırmak için ikinci-momentler analizini, etki tepki fonksiyonlarını ve refah analizini kullanmaktadır. Dış borçlanmaya uygulanan verginin ekonomi üzerindeki etkisini incelemek için hem teknoloji ve büyüme gibi reel şokları hem de ülke risk primi gibi finansal şokları içeren dinamik bir stokastik genel denge DSGE modeli kullanılmıştır. Çalışmanın bulguları, sermaye kontrol vergilerinin daha düşük seviyelerde uygulandığında yatırım ve tüketim gibi önemli makroekonomik değişkenlerin oynaklığı üzerinde azaltıcı bir etkiye sahip olduğunu göstermektedir. Tersine, bu vergiler daha yüksek seviyelerde uygulandığında ticaret dengesinin üretime oranının oynaklığı üzerinde dengeleyici bir etki göstermektedir. Dahası, niceliksel kanıtlar, ülke risk primi şoklarının hem ticaret dengesiçıktı oranındaki hem de yatırım seviyesindeki değişimler üzerinde önemli bir etkiye sahip olduğunu ve dalgalanmaların sırasıyla yaklaşık 25 ve 50sini oluşturduğunu ortaya koymaktadır. Son olarak, böyle bir vergilendirmenin varlığı, zamanlar arası fayda fonksiyonunun durağan durum seviyesini arttırmakta ve zamanlar arası fayda fonksiyonunun oynaklığını teknoloji ve büyüme şokları durumunda azaltmaktadır.

Makale detayları

Capital Control Taxes in an Emerging Market Economy

Yazarlar:

Oğuz Kaan Karakoyun

Yayıncı:

Ahmet Arif EREN

Ana Başlıklar:

Makroekonomik Teori | Konjonktür Dalgalanmaları

Dergi:

Fiscaoeconomia Vol.8 Issue 2, pp.564-589

Belge Tipi:

Makale

Yayın Tarihi:

5/2024

Belge Dili:

İngilizce

Document ID (Org No.):

2001317934

pISSN:

2564-7504

Business Cycles

Emerging Economy

Dynamic Stochastic Optimization

Capital Control Tax

Welfare Analysisİş Çevrimleri

Yükselen Ekonomi

Dinamik Stokastik Optimizasyon

Sermaye Kontrolü Vergisi

Refah Analizi

Sayı

Makale detayları

Yazarlar: Oğuz Kaan Karakoyun

Yayıncı: Ahmet Arif EREN

Ana Başlıklar: Makroekonomik Teori | Konjonktür Dalgalanmaları

Dergi: Fiscaoeconomia Vol.8 Issue 2, pp.564-589

Belge Tipi: Makale

Yayın Tarihi: 5/2024

Belge Dili: İngilizce

Document ID (Org No.): 2001317934

pISSN: 2564-7504

Sayı

Yazarlar:

Oğuz Kaan Karakoyun

Yayıncı:

Ahmet Arif EREN

Ana Başlıklar:

Makroekonomik Teori | Konjonktür Dalgalanmaları

Dergi:

Fiscaoeconomia Vol.8 Issue 2, pp.564-589

Belge Tipi:

Makale

Yayın Tarihi:

5/2024

Belge Dili:

İngilizce

Document ID (Org No.):

2001317934

pISSN:

2564-7504