Global Imbalances and Capital Account Openness: an Empirical Analysis

Jamel Saadaoui ()
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Jamel Saadaoui: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: We investigate if capital account openness has played a major role in the evolution of global imbalances on the period 1980-2003. We estimate, with panel regression techniques, the impact of capital account openness on medium-term current account imbalances for industrialized and emerging countries by using a de jure measure of capital account openness (the KAOPEN index (Chinn and Ito, 2002, 2006) and a de facto measure of capital account openness (the gross foreign assets measured as the sum of foreign assets and foreign liabilities). By increasing the opportunities of overseas investments, the relative capital account openness has had a positive impact on medium-term current account balances of industrialized countries (because of downward pressures on domestic investment rates). Conversely, the relative capital account openness has had a negative impact on medium-term current account balances of emerging countries (because of upward pressures on domestic investment rates). Nowadays, current account imbalances are larger in reason of higher capital mobility. Nevertheless, a large part of imbalances may be considered as unrelated with the evolution of macroeconomic fundamentals.

Keywords: Global Imbalances; Capital Account Openness; Panel Data (search for similar items in EconPapers)
Date: 2013-06-24
New Economics Papers: this item is included in nep-acc and nep-opm
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00861161v1
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Published in 62nd Congress of the French Economic Association (AFSE), Jun 2013, Aix-en-Provence, France

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