Cross-Border Payments Taxes and Alternative Capital Account Regimes

Abstract

This chapter reports on the scope for managing international capital flows by means of explicit taxes or restrictions. This has been an area of hot debate ever since the Mexican crisis, and the resulting contagion spread to other emerging market economies. At the same time, it is a topic left over from the 1992 collapse of European economies. The IMF has already issued a verdict: there is a problem, something ought to be done, nothing can be done (IMF, 1995). But the question stays on the agenda simply because it is implausible that countries otherwise well managed should become exposed to excess capital flows or the accompanying volatility.