Capital Account Liberalization: Theory, Evidence, and Speculation

Peter Henry

Journal of Economic Literature, 2007, vol. 45, issue 4, 887-935

Abstract: Research on the macroeconomic impact of capital account liberalization finds few, if any, robust effects of liberalization on real variables. In contrast to the prevailing wisdom, I argue that the textbook theory of liberalization holds up quite well to a critical reading of this literature. Most papers that find no effect of liberalization on real variables tell us nothing about the empirical validity of the theory because they do not really test it. This paper explains why it is that most studies do not really address the theory they set out to test. It also discusses what is necessary to test the theory and examines papers that have done so. Studies that actually test the theory show that liberalization has significant effects on the cost of capital, investment, and economic growth.

JEL-codes: E44 F32 O41 (search for similar items in EconPapers)
Date: 2007
Note: DOI: 10.1257/jel.45.4.887
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (377)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/jel.45.4.887 (application/pdf)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Capital Account Liberalization: Theory, Evidence, and Speculation (2007)
Working Paper: Capital Account Liberalization: Theory, Evidence, and Speculation (2006)
Working Paper: Capital account liberalization: theory, evidence, and speculation (2006)
Working Paper: Capital Account Liberalization: Theory, Evidence, and Speculation (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:jeclit:v:45:y:2007:i:4:p:887-935

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

Journal of Economic Literature is currently edited by Steven Durlauf

More articles in Journal of Economic Literature from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().