An Analysis of the Process of Capital Liberalization in Italy
April 1, 1992
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Summary
Beginning in 1985 Italy embarked on a path of progressive removal of its system of controls on portfolio investment, a process formally completed with the abolition of all remaining restrictions in 1990. In this paper we review this policy of capital liberalization and integrate the analysis with an examination of the process of stabilization of the lira exchange rate in the 1980s. Various indicators of capital controls’ effectiveness and target zone credibility are used to identify the temporal relations among capital liberalization, exchange rate stabilization and capital flows.
Subject: Balance of payments, Capital controls, Capital flows, Capital inflows, Exchange rate stability, Exchange rates, Foreign exchange
Keywords: capital control premium, Capital controls, Capital flows, Capital inflows, capital liberalization, capital mobility, exchange rate, exchange rate expectation, Exchange rate stability, Exchange rates, forward market, interest rate differential, liberalization of capital movement, net capital, WP
Pages:
38
Volume:
1992
DOI:
Issue:
027
Series:
Working Paper No. 1992/027
Stock No:
WPIEA0271992
ISBN:
9781451844436
ISSN:
1018-5941
