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Robbing the Riches; Capital Flight, Institutions, and Instability

Sweta Saxena, Meenakshi Rishi and Valerie Cerra

No 05/199, IMF Working Papers from International Monetary Fund

Abstract: Capital flight may undermine economic growth and the effectiveness of debt relief and foreign aid. This paper is the first attempt to test whether unsound macroeconomic policies or weak institutions lead to capital flight, using panel data for a large set of developing, emerging market and transition countries. In addition, the paper tests the revolving door hypothesis that links debt accumulation and capital flight, and analyzes the contribution of institutions to several channels in this relationship.

Keywords: Debt; Development assistance; Capital flight; Foreign aid; Institutions, external debt, debt accumulation, external borrowing, short-term debt, International Factor Movements and International Business: General, International Lending and Debt Problems, (search for similar items in EconPapers)
Pages: 39
Date: 2005-10-01
New Economics Papers: this item is included in nep-fmk
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Handle: RePEc:imf:imfwpa:05/199