In a world where economic logic ruled, restrictions on the use of capital controls would not find their way into trade agreements. But they have.
More than 250 economists (including yours truly) have now signed a letter that tries to reverse the tide. It concludes thus:
“We recommend that future U.S. FTAs and BITs permit governments to deploy capital controls withou being subject to investor claims, as part of a broader menu of policy options to prevent and mitigate financial crises.”
The letter is addressed to Hillary Clinton, Tim Geithner, and Ron Kirk. Here is the letter and the list of signatories.