Capital Account Liberalization: Allocative Efficiency or Animal Spirits?

Anusha Chari and Peter Henry

No 8908, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the year that capital-poor countries open their stock markets to foreign investors, the growth rate of their typical firm's capital stock exceeds its pre-liberalization mean by 4.1 percentage points. In each of the next three years the average growth rate of the capital stock for the 369 firms in the sample exceeds its pre-liberalization mean by 6.1 percentage points. However, there is no evidence that differences in the liberalization-induced changes in the cost of capital or investment opportunities drive the cross-sectional variation in the post-liberalization investment increases.

JEL-codes: E2 F3 (search for similar items in EconPapers)
Date: 2002-04
New Economics Papers: this item is included in nep-ifn
Note: CF IFM
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Citations: View citations in EconPapers (60)

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Working Paper: Capital Account Liberalization: Allocative Efficiency or Animal Spirits? (2002)
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