This is a nice chapter for at least two reasons. First, it combines theory with empirical results. Second, it uses an eclectic approach, i.e. it does not rely on a single, often narrow, theory to explain the world but rather draws on a number of theories.

Theory

Of course, the chapter also has its weaknesses. Let me start with the theoretical section, which is actually very similar to that in Alesina, Grilli, and Milesi-Ferretti (1994). It would be nice if the introduction made it clear how this contribution differs from previous papers by the author and made it clearer what the specific contribution of this particular chapter is. In this connection, the existing literature on the political economy of capital controls should be referred to, for example, an article by Epstein and Schor (1992).

The theory section describes a number of arguments in favor of capital controls. For an IMF official, this is not easy to accept because the IMF tends to promote free international capital flows and thus typically argues in favor of removing these controls. Indeed, the theoretical section does reflect some tension between, on the one hand, providing arguments in favor of such controls, and, on the other hand, counseling against capital controls by pointing out that capital controls tend to be counter-productive. If countries believed this counsel, they would almost never use them.