Working Paper: NBER ID: w7384
Authors: Michael Klein; Giovanni Olivei
Abstract: We show a statistically significant and economically relevant effect of open capital accounts on financial deepness and economic growth in a cross-section of countries over the period 1986 to 1995. Countries with open capital accounts over some or all of this period had a significantly greater increase in financial depth than countries with continuing capital account restrictions, and they also enjoyed greater economic growth. There results, however, are largely driven by the developed countries in the sample. The observed failure of capital account liberalization to promote financial deepness among developing countries suggests potentially important policy implications concerning the desirability of liberalizing the capital account.
Keywords: No keywords provided
JEL Codes: F36; F43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Capital account liberalization (F32) | Financial depth (O16) |
| Financial depth (O16) | Economic growth (O49) |
| Capital account liberalization (F32) | Economic growth (O00) |