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Effects of financial autarky and integration: The case of the South Africa embargo

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  • Coulibaly, Brahima
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    Abstract

    The paper interprets the imposition in 1985 and removal in 1993 of the embargo on South Africa as financial autarky and financial integration 'natural experiments', and studies the effects on the economy. The aggregate data indicate a decrease in the levels and growth rates of investment, capital, and output during the embargo period relative to the pre-embargo and post-embargo periods. To further rationalize these findings, we calibrate a neoclassical growth model to the economy. During the transition to steady state, we limit the country's ability to borrow for a period corresponding to the duration of the embargo. The derived dynamics for investment, capital, and output support the findings of a positive (negative) link between financial integration (isolation) and economic growth.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Money and Finance.

    Volume (Year): 28 (2009)
    Issue (Month): 3 (April)
    Pages: 454-478

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    Handle: RePEc:eee:jimfin:v:28:y:2009:i:3:p:454-478

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    Web page: http://www.elsevier.com/locate/inca/30443

    Related research

    Keywords: International finance Embargo Autarky Financial integration Financial isolation Economic growth;

    References

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    Cited by:
    1. Simplice A. ASONGU, 2012. "Globalization, Financial Crisis And Contagion: Time - Dynamic Evidence From Financial Markets Of Developing Countries," Journal of Advanced Studies in Finance, ASERS Publishing, vol. 0(2), pages 131-139, January.
    2. Simplice A., Asongu, 2011. "The 2011 Japanese earthquake, tsunami and nuclear crisis: evidence of contagion from international financial markets," MPRA Paper 39630, University Library of Munich, Germany.
    3. Bank for International Settlements, 2009. "Capital flows and emerging market economies," CGFS Papers, Bank for International Settlements, number 33, January.

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