Capital Account Liberalization as a Signal

Leonardo Bartolini () and Allan Drazen ()

No 5725, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present a model in which a government's current capital controls policy signals future policies. Controls on capital outflows evolve in response to news on technology, conditional on government attitudes towards taxation of capital. When there is uncertainty over government types, a policy of liberal capital outflows sends a favorable signal that may trigger a capital inflow. This prediction is consistent with the experience of several countries that have liberalized their capital account

JEL-codes: F21 C73 (search for similar items in EconPapers)
Date: Written 1997-07
Note: IFM
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Published as American Economic Review.

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Related works:
Working Paper: Capital account liberalization as a signal (1996)
Journal Article: Capital-Account Liberalization as a Signal (1997)
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