Modelling Capital Controls under the Purchasing Power Parity Assumption

Abstract

This study explores the effects of capital controls in the long run. At this juncture the assumption of purchasing power parity has been employed. The model of the study is based on differential equation systems analysis. The present study results show that capital constraints reduce the volatility of the exchange rate in the long run

Keywords

• Capital Controls,Differential Equation Systems,Purchasing Power Parity

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