About the product
This paper explores the complementary use of capital account regulations, and counter-cyclical prudential regulation of domestic financial intermediaries. It explains how these two finance policy tools are used to manage capital account volatility in developing countries. The paper is divided into three parts. Part one focuses on the microeconomics of boom-bust cycles. Part two looks at the possibility of directly affecting the source of the cycles through capital-account regulations. The final part considers the role of counter-cyclical regulations and presents conclusions.