More on capital controls from writers less lazy than me!

That's right: more productive corners of the intertubes have been busy covering the ongoing debate on capital controls. As our readers might recall, the IMF reversed it's long standing opposition to their use, accepting them as part of a macroeconomy's "policy toolkit." Dani "master of development policy" Rodrik referred to the IMF's policy change as "the end of an era of finance." True Stuff.

Well that was sooooo a few months ago.

Now Ilene Grabel over at Triple Crisis quite correctly points out that capital controls have become part of the "new normal" of the aftermath of the financial crisis. In other words, what was considered sacrilege before the world downturn has been, if not openly endorsed, for the most part accepted:

"But something happened on the way out of the global financial crisis. Policymakers have been quietly imposing a variety of capital controls, often marketing them with Madison Avenue savvy simply as prudential tools (akin to what Epstein, Grabel and Jomo KS termed “capital management techniques”)...The “market’s response” to these various controls—a surprising silence and, in some cases, tacit approval. The response by economists at the IMF has been in the same vein... And so it is that capital controls have quietly become another element of the new normal."

Also, Kavaljit Singh over at Vox has a very nice column reviewing new capital controls to curb volatility and increasing speculative financial flows in South Korea and Indonesia:

These new curbs are in response to growing concerns over short-term capital inflows. Given the historically low levels of interest rates in most developed countries, Indonesia has received large capital inflows since 2009. Unlike other Asian economies such as Singapore and Malaysia, the Indonesian economy showed some resilience during the global financial crisis. Despite hiccups in the financial markets, the Indonesian economy registered a positive growth of 6.0% in 2008 and 4.5% in 2009, largely due to strong domestic consumption and the dominance of natural resource commodities in its export basket... Yet due to the massive speculative capital inflows, the Indonesian authorities remain concerned that its economy might be destabilised if foreign investors decide to pull their money out quickly... Analysts believe that these policy measures may deter hot money inflows into the country and monetary policy may become more effective. Yet they expect tougher measures in the future if volatility in capital flows persists.

In anycase, quit hanging around here and go read these two excellent pieces yourself.