DMCA
Capital Account Liberalization and Economic Performance: Survey and Synthesis.” Working Paper no (2002)
| Venue: | 02/120, International Monetary Fund, Washington, DC |
| Citations: | 91 - 1 self |
BibTeX
@ARTICLE{Edison02capitalaccount,
author = {Hali J. Edison and Michael W. Klein and Luca Antonio Ricci and Torsten Sløk},
title = {Capital Account Liberalization and Economic Performance: Survey and Synthesis.” Working Paper no},
journal = {02/120, International Monetary Fund, Washington, DC},
year = {2002},
pages = {1--2}
}
Share
 |
 |
 |
 |
||
OpenURL
Abstract
This paper surveys the literature on the effects of capital account openness and stock market liberalization on economic growth and provides a synthesis in which we reconcile some of the different results presented in the literature. Various empirical measures used to gauge the presence of controls on capital account transactions and the liberalization of equity markets are discussed. We compare detailed measures of capital account controls that attempt to capture the intensity of enforcement with other indicators that simply capture whether controls are present. A detailed review of the literature is followed by an empirical section in which we trace the divergence in published results to differences in country coverage, sample periods, indicators of liberalization, and control variables across studies. Specifically, we show that when an institutional variable such as government reputation is added to the specification, the significance of capital account openness vanishes. Also, we demonstrate that enriching the specification by allowing for nonlinearities helps explain why different studies that ignore the nonlinear nature of the relationship find different results. [JEL F32, F33, F36] Economic theory suggests that unfettered international capital flows can foster a more efficient allocation of resources, provide opportunities for risk diver-
Keyphrases
economic performance capital account liberalization different result economic growth various empirical measure different study f36 economic theory empirical section equity market nonlinear nature institutional variable capital account openness risk diver sample period detailed review country coverage stock market liberalization unfettered international capital flow government reputation efficient allocation capital account openness vanishes capital account control detailed measure capital account transaction control variable jel f32
