Did the Malaysian Capital Controls Work?
Malaysia recovered from the Asian financial crisis swiftly after the imposition of capital controls in September 1998. The fact that Korea and Thailand recovered in parallel has been interpreted as suggesting that capital controls did not play a significant role in facilitating Malaysia’s rebound. However, the financial crisis was deepening in Malaysia in the summer of 1998, while it had significantly eased up in Korea and Thailand. We employ a time-shifted differences-indifferences technique to exploit the differences in the timing of the crises. Compared to IMF programs, we find that the Malaysian policies produced faster economic recovery, smaller declines in employment and real wages, and more rapid turnaround in the stock market.
About the Authors
Assistant Professor of Economics
Institute for International Economic Studies
Ethan Kaplan is an Assistant Professor of Economics at the Institute for International Economic Studies at Stockholm University. He is currently a Visiting Research Fellow at the Committee on Global Thought and the Department of Economics at Columbia University. He is an Associate Editor of the Journal of the European Economic Association. He received his Ph.D. in Economics from the University of California, Berkeley in 2005, his M.A. in Development Economics from Stanford University in 1999 and his B.A. in History from UC Berkeley in 1992.
Rafiq Hariri Professor of International Political Economy
John F. Kennedy School of Government