CONTAGIOUS POLICIES: AN ANALYSIS OF SPATIAL INTERACTIONS AMONG COUNTRIES' CAPITAL ACCOUNT POLICIES

Andreas Steiner

Pacific Economic Review, 2010, vol. 15, issue 3, 422-445

Abstract: Countries' capital account policies might be contagious in the sense that domestic policies are driven by other countries' policies. A model of strategic interactions is developed to show that countries' best response to policy changes elsewhere consists in imitating this policy. Using a spatial econometric model, the hypothesis of policy interactions is tested in a large panel data set. The evidence shows that capital account policies are contemporaneously correlated across countries. Concerning fundamentals, the move to a fixed exchange rate regime and an increase in real world interest rates are correlated with the imposition of capital account restrictions.

Date: 2010
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https://doi.org/10.1111/j.1468-0106.2010.00511.x

Related works:
Working Paper: Contagious Policies: An Analysis of Spatial Interactions Among Countries’ Capital Account Policies (2010)
Working Paper: Contagious Policies: An Analysis of Spatial Interactions Among Countries' Capital Account Policies (2010)
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