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| Author: | Bachetta, P. |
| Title: | Liberalization of capital movements and of the domestic financial system |
| Journal: | Economica
1992 : NOV, VOL. 59:236, p. 465-474 |
| Index terms: | CAPITAL FOREIGN INVESTMENT LIBERALISM FINANCIAL REGULATION |
| Language: | eng |
| Abstract: | The liberazlization of international capital movements has been a widespread phenomenon in the past two decades. The dynamic impact of a joint liberalization of capital movements and of the domestic financial sector. Both a simultaneous and a sequential liberalization are examined in an overlapping-generations model with a q-theory of investment. A liberalization generally leads to an initial period of capital inflows followed by capital outflows. It also increases investment and causes an overshooting share prices. The interest rate level before a liberalization will usually not indicate the direction of net capital flows. |
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