Do Inflows or Outflows Dominate? Global Implications of Capital Account Liberalization in China
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Summary:
This paper assesses the implications of Chinese capital account liberalization for capital flows. Stylized facts from capital account liberalization in advanced and large emerging market economies illustrate that capital account liberalization has historically generated large gross capital in- and outflows, but the direction of net flows has depended on many factors. An econometric portfolio allocation model finds that capital controls significantly dampen cross-border portfolio asset holdings. The model also suggests that capital account liberalization in China may trigger net portfolio outflows as large domestic savings seek to diversify abroad.
Series:
Working Paper No. 2013/189
Subject:
Balance of payments Bonds Capital account Capital account liberalization Financial institutions Financial markets Stock markets Stocks
English
Publication Date:
August 28, 2013
ISBN/ISSN:
9781475532159/1018-5941
Stock No:
WPIEA2013189
Pages:
32
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