Contagious Policies: An Analysis of Spatial Interactions Among Countries’ Capital Account Policies

Andreas Steiner

No 80, IEER Working Papers from Institute of Empirical Economic Research, Osnabrueck University

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.

Keywords: Capital Controls; Strategic Interaction; Panel Data Analysis (search for similar items in EconPapers)
JEL-codes: C23 F21 F3 F42 (search for similar items in EconPapers)
Pages: 31
Date: 2010-01-29
New Economics Papers: this item is included in nep-opm
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: 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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