01865cas a2200277 a 4500 AALejournalIMF014633 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498383202 1018-5941 BD-DhAAL BD-DhAAL Giordani, Paolo. Capital Flow Deflection / Paolo Giordani, Michele Ruta, Hans Weisfeld, Ling Zhu. Washington, D.C. : International Monetary Fund, 2014. 1 online resource (47 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper focuses on the coordination problem among borrowing countries imposing controls on capital infl ows. In a simple model of capital flows and controls, we show that inflow restrictions distort international capital flows to other countries and that, in turn, such capital flow deflection may lead to a policy response. We then test the theory using data on inflow restrictions and gross capital inflows for a large sample of developing countries between 1995 and 2009. Our estimation yields strong evidence that capital controls deflect capital flows to other borrowing countries with similar economic characteristics. Notwithstanding these strong cross-border spillover effects, we do not find evidence of a policy response. Mode of access: Internet Ruta, Michele. Weisfeld, Hans. Zhu, Ling. IMF Working Papers; Working Paper ; No. 2014/145 Full text available on IMF http://elibrary.imf.org/view/journals/001/2014/145/001.2014.issue-145-en.xml IMF e-Library