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New research published by the Bank for International Settlements explores how macro-prudential policy and capital controls interact, finding the tools’ effectiveness depends on financial development.
Yusuf Soner Baskaya, Ilhyock Shim and Philip Turner note the two types of policy are often used in conjunction, but tend to be studied separately. They argue this can lead to omitted variable bias in some other studies.
In their working paper, they use data on 39 economies to examine how domestic
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