Capital Control Indices
International Corruption Perceptions Index
(To control for the possible endogeneity of our capital controls index, we can instrument it using Transparency International's Corruption Perception Index. The index is an average of several survey-based measures of corruption from business executives, in-house experts at international consulting firms, and/or other people in the country in question. The corruption index is a good instrument for capital controls because the correlation between the corruption and capital controls measures is high, at -0.75. Countries with higher levels of corruption are likely to have more red tape and in particular heavier regulation of capital flows. (Miniane and Rogers (2003), "Capital Controls and the International Transmission of U.S. Money Shocks", Board of Governors of the Federal Reserve System, International Finance Discussion Papers, Number 778, September 2003