The S-curve: Understanding the Dynamics of Worldwide Financial Liberalization

Nan Li, Chris Papageorgiou (), Tong Xu and Tao Zha

No 28994, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a novel database of domestic financial reforms in 90 countries over 1973-2014, we document that global financial liberalization followed an S-curve path: reforms were slow and gradual in early periods, accelerated during the 1990s, and slowed down after 2000. We estimate a learning model that explains these dynamics. Policymakers updated their beliefs about the growth effects of financial reforms by learning from their own and other countries' experiences. Positive growth surprises in advanced economies helped accelerate belief updating worldwide, leading to the global wave of financial liberalization in the 1990s. The 2008 financial crisis, however, caused significant belief reversals.

JEL-codes: C11 C54 O11 O50 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-his
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Working Paper: The S-curve: Understanding the Dynamics of Worldwide Financial Liberalization (2021)
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