Working Paper: NBER ID: w9100
Authors: Hali J. Edison; Michael W. Klein; Luca Ricci; Torsten Sloek
Abstract: This paper reviews the literature on the effects of capital account liberalization and stock market liberalization on economic growth. The various empirical measures used to gauge the presence of controls on capital account transactions as well as indicators of stock market liberalization are discussed. We compare detailed measures of capital account controls that attempt to capture the intensity of enforcement with others that simply capture whether or not controls are present. Our review of the literature shows the contrasting results that have been obtained. These differences may reflect differences in country coverage, sample periods and indicators of liberalization. In order to reconcile these differences, we present new estimates of the effects on growth of capital account liberalization and stock market liberalization. We find some support for a positive effect of capital account liberalization on growth, especially for developing countries.
Keywords: No keywords provided
JEL Codes: F32; F33; F36
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| capital account liberalization (F32) | economic growth (O49) |
| capital account liberalization (F32) | financial development (O16) |
| financial development (O16) | economic growth (O49) |
| capital account liberalization (F32) | resource allocation efficiency (D61) |
| resource allocation efficiency (D61) | economic growth (O49) |