Capital controls and the political discount: The Spanish experience in the late 1980s

摘要: This article examines the wedge between Madrid and London peseta interest rates in late 1980s, when controls on capital inflows were imposed. A model of onshore offshore markets arbitrage two is proposed, where has a dynamic structure caused by process avoidance. The implies, first, that can follow an ARMA and, second, be cointegrated adjust according to error correction mechanism. These models are consistent with data show monetary independence given was limited.