search query: @journal_id 7 / total: 1856
reference: 30 / 1856
| Author: | Henry, P. B. |
| Title: | Capital-Account Liberalization, the Cost of Capital, and Economic Growth |
| Journal: | American Economic Review
2003 : MAY, VOL. 93:2, p. 91-96 |
| Index terms: | CAPITAL ACCOUNT GROWTH STOCK MARKETS |
| Language: | eng |
| Abstract: | While opinions about capital-account liberalization are abundant, facts are relatively scarce. This paper tries to increase the ratio of facts to opinions. In the late 1980's and early 1990's a number of developing countries liberalized their stock markets. The cost of capital falls when developing countries liberalize the stock market. Since the cost of capital falls, investment should also increase, as profit-maximizing firms drive down the marginal product of capital to its new lower cost. Liberalization leads to a sharp increase in the growth rate of the capital stock. Finally, as a direct consequence of growth accounting, the increase in investment should generate a temporary increase in the growth rate of output per worker. |
SCIMA