Capital Account Liberalization: Theoretical and Practical Aspects

ByMichael Mussa, Giovanni Dell'Ariccia, Barry J. Eichengreen, Enrica Detragiache

September 30, 1998

Summary

Capital account liberalization - orderly, properly sequence, and befitting the individual circumstances of countries- is an inevitable step for all countries wishing to realize the benefits of the globalized economy. This paper reviews the theories behind capital account liberalization and examines the dangers associated with free capital flows. The authors conclude that the dangers can be limited through a combination of sound macroeconomic and prudential policies.

Subject: Balance of payments, Banking, Capital account, Capital account liberalization, Capital controls, Capital flows, Commercial banks, Financial institutions

Keywords: adverse selection, bank, Capital account, Capital account liberalization, Capital controls, Capital flows, Commercial banks, East Asia, Europe, financial market distortion, Global, liberalization, market, OP, sequence capital account liberalization, sequenced capital account liberalization, short-term debt, squeeze margin

Pages:
72
Volume:
1998
DOI:
https://doi.org/10.5089/9781557757777.084
Issue:
016
Series:
Occasional Paper No. 1998/016
Stock No:
S172EA0000000
ISBN:
9781557757777
ISSN:
0251-6365

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