Capital Account Liberalization and Growth: Was Mr. Mahathir Right? / Barry Eichengreen, David Leblang.

Format:

Book

Author/Creator:

Eichengreen, Barry.

Contributor:

National Bureau of Economic Research.

Leblang, David.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9427.

NBER working paper series no. w9427

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Capital Account Liberalization and Growth

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

Much ink has been spilled over the connections between capital account liberalization and growth. One reason that previous studies have been inconclusive, we show, is their failure to account for the impact of crises on growth and for the capacity of controls to limit those disruptive output effects. Accounting for these influences, it appears that controls influence macroeconomic performance through two channels, directly (what we think of as their positive impact on resource allocation and efficiency) and indirectly (by limiting the disruptive effects of crises at home and abroad). Because these influences work in opposite directions, it is not surprising that previous studies, in failing to distinguish between them, have been unable to agree whether the effect of controls tilts one way or the other. And because vulnerability to crises varies across countries and with the structure and performance of the international financial system, it is not surprising that the effects of capital account liberalization on growth are contingent and context specific. We document these patterns using two entirely different data sets: a panel of historical data for 21 countries covering the period 1880-1997, and a wider panel for the post-1971 period like that employed in other recent studies.

Notes:

Print version record

January 2003.