What are the Real Effects of Liberalizing International Capital Movements?

Daniele Checchi

Open Economies Review, 1992, vol. 3, issue 1, 83-125

Abstract: Progress in financial integration calls for the abolition of capital controls, especially within the European community. Traditional analysis would then predict a better reallocation of productive capacity at the international level. A formal model is developed in order to show that it is impossible to draw unequivocal conclusions; moreover, when financial investors are allowed to allocate their wealth in public bonds, and governments pursue full employment targets, cases exist where the financial liberalization produces a reduction in capital accumulation in both the participating countries. Copyright Kluwer Academic Publishers 1992

Keywords: open economy macroeconomics; exchange rates; international monetary arrangements (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1007/BF01886183

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