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

Andreas Steiner ()

No 41, Proceedings of the German Development Economics Conference, Hannover 2010 from Verein für Socialpolitik, Research Committee Development Economics

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)
New Economics Papers: this item is included in nep-ure
Date: 2010
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Related works:
Journal Article: CONTAGIOUS POLICIES: AN ANALYSIS OF SPATIAL INTERACTIONS AMONG COUNTRIES' CAPITAL ACCOUNT POLICIES (2010) Downloads
Working Paper: Contagious Policies: An Analysis of Spatial Interactions Among Countries’ Capital Account Policies (2010) Downloads
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