Theoretical Analysis of the Influence of Capital Control Policy on Capital Outflow

FANG Hui1 XU Jie1 YANG Yu-jie2 (1.Department of International Economics, Shandong University of Finance, Jinan 250014, P.R.China; 2.Binzhou Environment Protection Bureau, Binzhou 256600, P.R.China)  

The main objective of capital controls policy is to prevent or at least reduce the amount of capital outflow, but home assets holders always worry that they would never control their own assets freely because of this policy. Many authors have provided evidence that capital control policy only can help achieve this objective as the government has originally expected in the short term. However, the empirical evidence from China shows capital control cannot prevent or reduce the capital outflow even in the short term. So the other possibility is that such a short-term policy may even simulate capital outflow or capital flight. The objective of this article is to show how the capital control policy stimulates capital outflow or capital flight from home country.

【Key Words】： capital control capital outflow capital flight
【CateGory Index】： F830.7;F224

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