Capital Account Liberalization, Institutional Quality and Economic Growth: Theory and Evidence / Michael W. Klein.

Format:

Book

Author/Creator:

Klein, Michael W.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11112.

NBER working paper series no. w11112

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Capital Account Liberalization, Institutional Quality and Economic Growth

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

This paper shows that the effect of capital account liberalization on growth depends upon the environment in which that policy occurs. A theoretical model demonstrates the possibility of an inverted-U shaped relationship between the responsiveness of growth to capital account liberalization and institutional quality. Three empirical specifications based on the model are estimated using a panel of 71 countries. Estimates of all three specifications support the hypothesis of a non-monotonic interaction between the responsiveness of growth to capital account liberalization and institutional quality, with about one-quarter of the countries, those with better (but not the best) institutions exhibiting a statistically significant and economically meaningful effect of capital account openness on economic growth.

Notes:

Print version record

February 2005.