American Economic Review Vol. 87 No. 1 1997
Capital-Account Liberalization as a Signal
Abstract
We present a model in which a government's current capital-control policy signals future policies. Controls on capital outflows evolve in response to news on technology, conditional on government attitudes toward taxation of capital. When there is uncertainty over government types, a policy of liberal capital outflows sends a favorable signal that may trigger a capital inflow. This prediction is consistent with the experience of several countries that have liberalized their capital accounts.
- Volume
- 87
- Issue
- 1
- Pages
- 138-154
- Sources
- bibtex:phds-export.bib