Exchange rates intervention and capital mobility control. Comparisons and simultaneous optimization

When the policy of optimal intervention in the foreign exchange market and that of optimal control of capital mobility are considered individually, their relative effectiveness in stabilizing the economy cannot be determined a priori. When they are jointly considered, the best combination is (i) zero capital mobility and fixed exchange rate, when only expenditure disturbances occur, (ii) flexible exchange rate and an arbitrary degree of mobility control, when only trade disturbances occur, or (iii) fine-tuning intervention accompanied by completely free or zero capital mobility, depending on the given situations, when both types of disturbances are present.