Financial Market Incompleteness and International Cooperation on Capital Controls
Shigeto Kitano () and
Additional contact information
Kenya Takaku: Faculty of International Studies, Hiroshima City University, Japan
No DP2020-05, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University
We examine how the degree of financial market incompleteness affects welfare gains from international cooperation on capital controls. When financial markets are incomplete, international risk sharing is disturbed. However, the optimal global policy significantly reverses the welfare deterioration due to inefficient risk-sharing. We show that when financial markets are more incomplete, the welfare gap between the optimal global policy and the Nash equilibrium increases, and the welfare gains from international cooperation on capital controls then become larger.
Keywords: Financial markets; Incomplete markets; Policy cooperation; Capital controls; Optimal policy; Welfare; Ramsey policy; Open-loop Nash game (search for similar items in EconPapers)
JEL-codes: D52 E61 F32 F38 F42 G15 (search for similar items in EconPapers)
Pages: 23 pages
New Economics Papers: this item is included in nep-cba, nep-dge, nep-gth, nep-mac, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2020-05.pdf First version, 2020 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:dp2020-05
Access Statistics for this paper
More papers in Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University 2-1 Rokkodai, Nada, Kobe 657-8501 JAPAN. Contact information at EDIRC.
Bibliographic data for series maintained by Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University ().