Having just reversed its stance on capital controls, the IMF is reversing again. Bob Davis of the WSJ points out that countries facing attendant risks of asset bubbles, use of capital controls “is justified as part of the policy toolkit to manage inflows,” the IMF paper wrote. Even if investors figure out ways around the controls, the restrictions still can be useful, the IMF said because “the cost of circumvention acts as ‘sands in the wheels’” and slows down investment.

Today, the IMF came close to changing its mind again. “Even if capital controls prove useful for individual countries in dealing with capital inflow surges,” the IMF wrote  its semi-annual Global Financial Stability Report, “they may lead to adverse multilateral effects… A widespread reliance on capital controls may delay necessary macroeconomic adjustments in individual countries and, in the current environment, prevent the global rebalancing of demand and thus hinder the recovery of global growth.” It seems the IMF backs controls as short-term measures, but not as long-term solutions, but doesn’t give specific advice how to tell one situation from another. Here’s the IMF’s best shot: “Since the use of capital controls is advisable only to deal with temporary inflows… they can be useful even if their effectiveness diminishes over time,” the GFS report suggests. “However the decision to implement capital controls should consider the distortionary effects” too. Davis summarizes it nicely: IMF to policy makers in developing countries: Good luck making the call.