{"page":"\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/resources-c03aa079.css\" /\u003e\n\u003clink rel=\"stylesheet\" href=\"https://lessonplanet.com/assets/packs/css/lp_boclips_stylesheets-517835be.css\" media=\"all\" /\u003e\n\u003cdiv data-title='How do we prevent future financial crisis in emerging markets?' data-url='/boclips/videos/623aced7a82b8d28be97c63f' data-video-url='/boclips/videos/623aced7a82b8d28be97c63f' id='bo_player_modal'\u003e\n\u003cdiv class='boclips-resource-page modal-dialog panel-container'\u003e\n\u003cdiv class='react-notifications-root'\u003e\u003c/div\u003e\n\u003cdiv class='rp-header'\u003e\n\u003cdiv class='rp-type'\u003e\n\u003ci aria-hidden='true' class='fai fa-regular fa-circle-play'\u003e\u003c/i\u003e\nVideo\n\u003c/div\u003e\n\u003ch1 class='rp-title' id='video-title'\u003e\nHow do we prevent future financial crisis in emerging markets?\n\u003c/h1\u003e\n\u003cdiv class='rp-actions'\u003e\n\u003cdiv class='mr-1'\u003e\n\u003ca class=\"btn btn-success\" data-posthog-event=\"Signup: LP Signup Activity\" data-posthog-location=\"body_link_boclips\" data-remote=\"true\" href=\"/subscription/new\"\u003e\u003cspan\u003e\u003cspan\u003eGet Free Access\u003c/span\u003e\u003cspan class=\"\"\u003e for 10 Days\u003c/span\u003e\u003cspan\u003e!\u003c/span\u003e\u003c/span\u003e\u003c/a\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-body'\u003e\n\u003cdiv class='rp-info'\u003e\n\u003cdiv aria-label='Hide resource details' class='rp-hide-info' role='button' tabindex='0'\u003e\u0026times;\u003c/div\u003e\n\u003ci aria-label='Expand resource details' class='rp-expand-info fai fa-solid fa-up-right-and-down-left-from-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003ci aria-label='Compress resource details' class='rp-compress-info fai fa-solid fa-down-left-and-up-right-to-center' role='button' tabindex='0'\u003e\u003c/i\u003e\n\u003cdiv class='rp-rating'\u003e\n\u003cspan class='resource-pool'\u003e\n\u003cspan class='pool-label'\u003ePublisher:\u003c/span\u003e\n\u003cspan class='pool-name'\u003e\n\u003cspan class='text'\u003e\u003ca data-publisher-id=\"30357122\" href=\"/search?publisher_ids%5B%5D=30357122\"\u003eInstitute for New Economic Thinking\u003c/a\u003e\u003c/span\u003e\n\u003c/span\u003e\n\u003c/span\u003e\n\u003c/div\u003e\n\u003cdiv class='rp-description'\u003e\n\u003cspan class='short-description'\u003eAs we learned as early as the late 1990s, international capital flows can create significant financial instability in emerging economies. Does this make it optimal to impose capital controls? Or should policymakers rely on domestic...\u003c/span\u003e\n\u003cspan class='full-description hide'\u003eAs we learned as early as the late 1990s, international capital flows can create significant financial instability in emerging economies. Does this make it optimal to impose capital controls? Or should policymakers rely on domestic macroprudential regulation in their quest for greater financial stability? \u003cbr/\u003e\u003cbr/\u003eAnton Korinek, Assistant Professor at the Department of Economics at Johns Hopkins University, shows that it is desirable to employ both instruments to mitigate contractionary exchange rate depreciations. Macroprudential regulation reduces the amount and riskiness of financial liabilities, no matter whether they are financed by domestic or foreign lenders, while capital controls increase the aggregate net worth of the economy by reducing net inflows. Both types of policy measures can make the economy more stable and reduce the incidence and severity of crises.\u003cbr/\u003e\u003cbr/\u003eKorinek's research suggests that it is optimal to impose capital controls and macroprudential regulation that amount to a 2% tax on debt flows, or equivalent quantity regulations. In advanced countries where the risk of contractionary exchange rate depreciations is more limited, the role for capital controls subsides. 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