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The Welfare Effects of Trade and Capital Market Liberalization: Consequences of Different Sequencing Scenarios / Sebastian Edwards, Sweder van Wijnbergen.
- Format:
- Book
- Author/Creator:
- Edwards, Sebastian.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w1245.
- NBER working paper series no. w1245
- Language:
- English
- Subjects (All):
- International trade--Social aspects.
- International trade.
- Public welfare.
- Capital market--Government policy.
- Capital market.
- Investments, Foreign.
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- The Welfare Effects of Trade and Capital Market Liberalization
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1983.
- Cambridge, MA : National Bureau of Economic Research, 1983.
- Summary:
- This paper deals with the dynamics of trade and capital account liberalization in a developing country. The welfare consequences of trade and capital account liberalization under alternative sequencing scenarios are investigated. We draw on standard trade theory results to show that the opening of the capital account in the presence of trade distortions may be welfare reducing if foreign borrowing is used to increase investment. However we demonstrate that this welfare reducing effect of opening the capital account will not occur if shadow prices are used to guide investment decisions. It is then shown that if capital market restrictions fall disproportionally on investment (as opposed to consumption) a gradual reduction of import tariffs is superior to an abrupt trade liberalization.
- Notes:
- Print version record
- December 1983.
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