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Opening the Capital Account of Transition Economies: How Much and How Fast

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  • Daniel Daianu

    ()

  • Radu Vranceanu

    ()

Abstract

In the late eighties, many developing countries followed the example of the most advanced countries and opened their capital account (K.A.) in an attempt to reap new gains from increased integration with the world economy. By 2000, after the wave of financial and currency crises that hurt the global economy in the last decade, enthusiasm about K.A. liberalization has much faded. Firstly, the relationship between development and capital account liberalization did not come out to be as solid as initially expected; secondly, greater capital mobility has brought about increased global financial instability. New thinking in international economics calls for proper sequencing in opening the K.A.: liberalization should proceed in step with progress in macroeconomic stability, structural reform and creation of a sound internal financial system. In this paper, we analyze to what extent and at what pace should transition economies carry out the K.A. liberalization process.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 511.

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Length: 32 pages
Date of creation: 22 Sep 2002
Date of revision:
Handle: RePEc:wdi:papers:2002-511

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Keywords: capital mobility; capital outflows; financial instability; transition;

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References

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Cited by:
  1. Maurel Mathilde, 2004. "Financial integration, exchange rate regimes in CEECs, and joining the EMU : Just do it..," Cahiers de la Maison des Sciences Economiques j04027a, Université Panthéon-Sorbonne (Paris 1).
  2. Carmignani, Fabrizio & Chowdhury, Abdur R., 2005. "Does Financial Openness Promote Economic Integration? Some Evidence from Europe and the CIS," Working Paper Series RP2005/74, World Institute for Development Economic Research (UNU-WIDER).
  3. Daniel Daianu, 2004. "Policy Diversity as an Engine of Development," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 1(1), pages 33-58, June.
  4. Mathilde Maurel, 2004. "Financial Integration, Exchange Rate Regimes in CEECs, and joining the EMU : Just Do It," Sciences Po publications n°650, Sciences Po.
  5. Boubakri, Salem & Guillaumin, Cyriac, 2011. "Financial integration and currency risk premium in CEECs: Evidence from the ICAPM," Emerging Markets Review, Elsevier, vol. 12(4), pages 460-484.
  6. Fabrizio Carmignani & Abdur Chowdhury, 2005. "The Impact of Financial Openness on Economic Integration: Evidence from the Europe and the Cis," Working Papers 88, University of Milano-Bicocca, Department of Economics, revised Apr 2005.

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