Effectiveness of capital controls to reduce short term flows

We explore the conditions under which capital controls can be effective to reduce short term flows. In a recent study, Magud, Reinhart and Rogoff, 2018, present a model in which this effectiveness is dependent on the elasticity of short-term capital on total capital flows. We verify the model propositions empirically by computing these elasticities and monitoring of the variation of short-term flows for countries experienced with control. The application of this elasticity approach to the emergents countries of South Asia and Latin America allow confirming the model propositions, and these elasticities are determinants for effective restrictions policies.