Country Risk and the Organization of International Capital Transfer
AbstractForeign portfolio investment is threatened by the risk of default and repudiation, while direct foreign investment is threatened by the risk of expropriation. These two contractual forms of investment can differ substantially in: (1) the amount of capital they can transfer from abroad to capital-importing countries; (2) the shadow cost of capital and (3) their implications for the tax policy of the host. The interaction of public borrowing from abroad with investments abroad by private citizens of the borrowing country can imply multiple equilibria with very different welfare consequences. One equilibrium involves private inflows and repayment of public debt. Another is characterized by capital flight and default.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2204.
Date of creation: Mar 1987
Date of revision:
Publication status: published as Calvo, G., R. Findlay, P. Kouri and J. deMacedo (eds.) Debt, Stabilization and Development. Oxford: Basil Blackwell, 1989.
Note: ITI IFM
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- Jonathan Eaton & Mark Gersovitz & Joseph E. Stiglitz, 1991.
"The Pure Theory of Country Risk,"
in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 391-435
National Bureau of Economic Research, Inc.
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"Bank Runs, Deposit Insurance, and Liquidity,"
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University of Chicago Press, vol. 91(3), pages 401-19, June.
- Mohsin S. Khan & Nadeem Ul Haque, 1985. "Foreign Borrowing and Capital Flight: A Formal Analysis (Emprunt extÃ©rieur et Ã©vasion de capitaux: analyse mathÃ©matique) (Endeudamiento externo y fuga de capitales: Un anÃ¡lisis formal)," IMF Staff Papers, Palgrave Macmillan, vol. 32(4), pages 606-628, December.
- Jonathan Eaton & Mark Gersovitz, 1982.
"A Theory of Expropriation and Deviations From Perfect Capital Mobility,"
NBER Working Papers
0972, National Bureau of Economic Research, Inc.
- Eaton, Jonathan & Gersovitz, Mark, 1984. "A Theory of Expropriation and Deviations from Perfect Capital Mobility," Economic Journal, Royal Economic Society, vol. 94(373), pages 16-40, March.
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