Punishment schedules for capital flight

What are appropriate penalties to discourage capital flight? Economic punishments can serve as effective deterrents for economic crimes but the penalties themselves are often costly to impose and enforce. Good public policy must take these costs into account in addition to the effectiveness of punishment schemes. In order to construct a deterrent to economically motivated behaviour, the environment that generates this motivation must be well understood. We show that the incentives for capital flight can differ in predictable ways. This difference in incentives for capital flight can differ in predictable ways. this difference in incentives implies that, even though standard risk aversion analyses might suggest the opposite, it will often be better to penalise larger transactions in a higher proportion than smaller ones.