Capital Controls in Chile in the 1990s B Case Solution

Case Solution

Supplements the (A) case.

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Questions Covered

1.       Why did Chile institute capital controls in 1991? Did the controls meet their objectives? What was the role of other policies in Chile's economic success in the 1990s?

2.       What were the arguments for and against getting rid of the controls in the context of the aftermath of the Asian and Russian financial crises? What were the alternative policy options? Was Chile in danger of suffering a crisis such as that of 1982?

3.       How should the relaxing of controls be sequenced with other policies? What can other countries learn from Chile's experiences?