Capital Flight, External Debt and Domestic Policies

Michael Dooley and Kenneth Kletzer

No 4793, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: It is now well documented that capital flight has been a dominant feature of capital movements between developing and industrial countries. Since 1988 reductions in the stock of flight capital more than account for private capital flows to emerging markets. This suggests that what appears to be a diversification of portfolios of residents of developed countries may be a restoration of 'home bias' in the portfolios of residents of developing countries. We show that changes in the stock of capital flight can increase or decrease welfare depending on the structure of distortionary taxes and subsidies on capital income and the effects of capital flight on the tax base.

JEL-codes: F32 F34 (search for similar items in EconPapers)
Date: 1994-07
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Published as Economic Review, Federal Reserve Bank of San Francisco, Number 3, 1994, pp. 29-37.

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Journal Article: Capital flight, external debt, and domestic policies (1994)
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