Since the global financial crisis, a growing theoretical literature and international policymakers
advocate the countercyclical use of macroprudential policies and capital controls
on net capital inflows. This paper builds a novel dataset on easing and tightening of capital
controls on inflows and outflows for 24 emerging economies for the period 1997-2014 at a
quarterly frequency and examines a time-varying adjustment of capital controls and macroprudential
policies (Cerutti et al., 2017) along global and local business and financial
cycles. The results suggest that macroprudential policies and capital controls on inflows
are imposed in a countercyclical manner with respect to global business and financial
variables, showing that foreign developments have an influence on domestic policies. At
the same time, capital controls on outflows behave procyclically along local business and
financial cycles. The pattern of loosening and tightening of macroprudential policies and
capital controls differs across instruments and categories of assets.