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Time-varying estimates on the openness of the capital account in Korea and Taiwan

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  • Reisen, Helmut
  • Yeches, Helene

Abstract

How open are the capital accounts in Korea and Taiwan? Has there been a trend towards more financial openness during the 1980s? This paper aims at answering both questions by estimating a model of interest determination first outlined by Edwards and Khan, in an extension suggested by Haque and Montiel. Use is made of a time-varying parameter estimation based on the Kalman filter technique, instead of the usual constant parameter estimation. The findings indicate a low degree of capital mobility for both Korea and Taiwan, and no trend towards more financial openness (except recently in Taiwan's interbank market). The dismantling of capital controls and of internal financial restrictions is thus likely to impose an important loss of monetary autonomy in both countries ... Quel est le degré d'ouverture des comptes de capital en Corée et à Taiwan ? Une tendance vers une plus grande ouverture financière s'est-elle manifestée au cours des années 80 ? Le but de ce document est de répondre à ces deux questions en procédant à l'estimation d'un modèle de détermination des taux d'intéret, d'abord esquissé par Edwards et Khan, puis approfondi par Haque et Montiel. On utilise l'estimation d'un paramètre variant avec le temps et basée sur la technique du filtre de Kalman au lieu de l'estimation habituelle d'un paramètre constant. Les résultats indiquent un faible degré de mobilité des capitaux, à la fois pour la Corée et Taiwan et aucune tendance vers une plus grande ouverture financière (sauf récemment à Taiwan dans le marché inter-bancaire). Le démantèlement du système de contrôle des capitaux et des restrictions financières internes va donc provoquer une diminution sensible de l'autonomie monétaire dans ces deux pays ...

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 41 (1993)
Issue (Month): 2 (August)
Pages: 285-305

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Handle: RePEc:eee:deveco:v:41:y:1993:i:2:p:285-305

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Cited by:
  1. Sebastian Edwards, 2000. "Capital Flows, Real Exchange Rates, and Capital Controls: Some Latin American Experiences," NBER Chapters, in: Capital Flows and the Emerging Economies: Theory, Evidence, and Controversies, pages 197-254 National Bureau of Economic Research, Inc.
  2. Kate Phylaktis, 1995. "Capital Market Integration in the Pacific Basin Region: An Analysis of Real Interest Rate Linkages," IMF Working Papers 95/133, International Monetary Fund.
  3. Menzie Chinn & Michael Dooley, 1995. "National, regional and international capital markets: Measurement and implications for domestic financial fragility," International Finance 9508006, EconWPA.
  4. Thomas D. Willett & Young Seok Ahn & Manfred W. Keil, . "Capital Mobility for Developing Countries May Not Be So High," Claremont Colleges Working Papers 2000-26, Claremont Colleges.
  5. Menzie Chinn & Michael Dooley, 1995. "Asia-Pacific Capital Markets: Measurement of Integration and the Implications for Economic Activity," NBER Working Papers 5280, National Bureau of Economic Research, Inc.
  6. Michael P. Dooley & Menzie Chinn, 1995. "Financial Repression and Capital Mobility: Why Capital Flows and Covered Interest Rate Differentials Fail to Measure Capital Market Integration," NBER Working Papers 5347, National Bureau of Economic Research, Inc.
  7. Vuyyuri, S., 2004. "Linkages of Indian Interest Rates with US and Japanese Rates," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(2).
  8. Phylaktis, Kate, 1999. "Capital market integration in the Pacific Basin region: an impulse response analysis," Journal of International Money and Finance, Elsevier, vol. 18(2), pages 267-287, February.
  9. Sun, Lixing, 2004. "Measuring time-varying capital mobility in East Asia," China Economic Review, Elsevier, vol. 15(3), pages 281-291.
  10. Menzie D. Chinn & William F. Maloney, 1996. "Financial and Capital Account Liberalization in the Pacific Basin: Korea and Taiwan during the 1980's," NBER Working Papers 5814, National Bureau of Economic Research, Inc.
  11. Liliana Rojas-Suárez & Donald J. Mathieson & Michael P. Dooley, 1996. "Capital Mobility and Exchange Market Intervention in Developing Countries," IMF Working Papers 96/131, International Monetary Fund.
  12. Sachsida, Adolfo & Caetano, Marcelo Abi-Ramia, 2000. "The Feldstein-Horioka puzzle revisited," Economics Letters, Elsevier, vol. 68(1), pages 85-88, July.
  13. Bernhard Fischer & Helmut Reisen, 1992. "Full currency convertibility in Eastern Europe?," Intereconomics: Review of European Economic Policy, Springer, vol. 27(5), pages 203-209, September.
  14. Sebastian Edwards, 1998. "Capital Inflows into Latin America: A Stop-Go Story?," NBER Working Papers 6441, National Bureau of Economic Research, Inc.
  15. Phylaktis, Kate & Ravazzolo, Fabiola, 2002. "Measuring financial and economic integration with equity prices in emerging markets," Journal of International Money and Finance, Elsevier, vol. 21(6), pages 879-903, November.
  16. Jamilov, Rustam, 2012. "Capital mobility in the Caucasus," MPRA Paper 38184, University Library of Munich, Germany, revised Apr 2012.
  17. Willett, Thomas D. & Keil, Manfred W. & Ahn, Young Seok, 2002. "Capital mobility for developing countries may not be so high," Journal of Development Economics, Elsevier, vol. 68(2), pages 421-434, August.

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