Bolívar Distorted: The Effects of Exchange Controls on the ...

Contents
Acknowledgments ......................................................................................................................... 3
Abstract.......................................................................................................................................... 4
Introduction................................................................................................................................... 4
Literature Review ......................................................................................................................... 7
A Brief History <strong>of</strong> Chávez .......................................................................................................... 11
<strong>The</strong> Problem with the Petrostate............................................................................................... 13
International Reserves and the FIEM....................................................................................... 16
Capital Flight and Domestic Investment .................................................................................. 17
CADIVI and the creation <strong>of</strong> exchange controls ....................................................................... 19
<strong>The</strong> Permit Process and Corruption ......................................................................................... 22
<strong>Exchange</strong> <strong>Controls</strong> as Import <strong>Controls</strong> .................................................................................... 24
<strong>The</strong> Chicken or the Ally? ........................................................................................................... 26
<strong>The</strong> CANTV Dollar and the Parallel Market........................................................................... 28
Official Inflation versus Real Inflation ..................................................................................... 30
<strong>The</strong> Immigrant Tragedy............................................................................................................. 30
Price Distortions.......................................................................................................................... 32
El Millardito ................................................................................................................................ 36
Devaluation.................................................................................................................................. 36
Why not eliminate the controls?................................................................................................ 39
Conclusion ................................................................................................................................... 43
Appendix I Macroeconomic Graphs and Tables ..................................................................... 43
GDP........................................................................................................................................... 43
GDP per capita.......................................................................................................................... 43
GDP per capita growth.............................................................................................................. 44
Fuel Exports.............................................................................................................................. 44
Domestic Credit ........................................................................................................................ 45
Debt service .............................................................................................................................. 45
Appendix II.................................................................................................................................. 46
Selected CADIVI Regulations.................................................................................................. 46
Appendix III Reserves and <strong>Exchange</strong> Rate Graphs and Tables........................................ 47
Historical <strong>Exchange</strong> Rate.......................................................................................................... 47
Recent <strong>Exchange</strong> Rate .............................................................................................................. 47
International Reserves............................................................................................................... 48
Appendix IV Consumer Price Data Graphs and Tables.................................................... 49
Consumer Price Index............................................................................................................... 49
Natural Log <strong>of</strong> Consumer Price Index (Recent) ....................................................................... 49
Monetary Liquidity and Consumer Price Index........................................................................ 50
Bibliography ................................................................................................................................ 51
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