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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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Suggested Citation

  • Reisen, Helmut & Yeches, Helene, 1993. "Time-varying estimates on the openness of the capital account in Korea and Taiwan," Journal of Development Economics, Elsevier, vol. 41(2), pages 285-305, August.
  • Handle: RePEc:eee:deveco:v:41:y:1993:i:2:p:285-305
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    Cited by:

    1. Sachsida, Adolfo & Caetano, Marcelo Abi-Ramia, 2000. "The Feldstein-Horioka puzzle revisited," Economics Letters, Elsevier, vol. 68(1), pages 85-88, July.
    2. 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 197-246 National Bureau of Economic Research, Inc.
    3. Helmut Reisen, 1995. "Managing Temporary Capital Inflows: Lessons from Asia and Latin America," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 395-427.
    4. Phylaktis, Kate, 1997. "Capital market integration in the Pacific-Basin region: An analysis of real interest rate linkages," Pacific-Basin Finance Journal, Elsevier, vol. 5(2), pages 195-213, June.
    5. Xiangsheng Dou & Xiangsheng Dou, 2016. "Measure and Evaluation of Financial Openness in China," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 985-994.
    6. Menzie Chinn & Michael Dooley, 1995. "National, regional and international capital markets: Measurement and implications for domestic financial fragility," International Finance 9508006, EconWPA.
    7. Thomas D. Willett & Young Seok Ahn & Manfred W. Keil, "undated". "Capital Mobility for Developing Countries May Not Be So High," Claremont Colleges Working Papers 2000-26, Claremont Colleges.
    8. Bernhard Fischer & Helmut Reisen, 1992. "Full currency convertibility in Eastern Europe?," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 27(5), pages 203-209, September.
    9. 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.
    10. Maloney, William F., 1997. "Testing capital account liberalization without forward rates Another look at Chile 1979-1982," Journal of Development Economics, Elsevier, vol. 52(1), pages 139-168, February.
    11. Chinn, Menzie-D & Dooley, Michael-P, 1997. "Financial Repression and Capital Mobility: Why Capital Flows and Covered Interest Rate Differentials Fail to Measure Capital Market Integration," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 15(2), pages 81-103, December.
    12. Sebastian Edwards, 1998. "Capital Inflows into Latin America: A Stop-Go Story?," NBER Working Papers 6441, National Bureau of Economic Research, Inc.
    13. 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).
    14. Sergio L. Schmukler, 2004. "Financial globalization: gain and pain for developing countries," Economic Review, Federal Reserve Bank of Atlanta, issue Q 2, pages 39-66.
    15. 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.
    16. Jamilov, Rustam, 2013. "Capital mobility in the Caucasus," Economic Systems, Elsevier, vol. 37(2), pages 155-170.
    17. Sun, Lixing, 2004. "Measuring time-varying capital mobility in East Asia," China Economic Review, Elsevier, vol. 15(3), pages 281-291.
    18. 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.
    19. Menzie Chinn & William Maloney, 1998. "Financial and Capital Account Liberalization in the Pacific Basin: Korea and Taiwan During the 1980's," International Economic Journal, Taylor & Francis Journals, vol. 12(1), pages 53-74.
    20. 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.
    21. Jamilov, Rustam, 2012. "Capital mobility in the Caucasus," MPRA Paper 38184, University Library of Munich, Germany, revised Apr 2012.
    22. de Brouwer,Gordon, 1999. "Financial Integration in East Asia," Cambridge Books, Cambridge University Press, number 9780521651486.
    23. 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.
    24. Ying, Yung-Hsiang & Kuan, Chung-Ming & Tung, Chris Y. & Chang, Koyin, 2013. "“Capital mobility in East Asian Countries is not so high”: Examining the impact of sterilization on capital flows," China Economic Review, Elsevier, vol. 24(C), pages 55-64.
    25. C. Rangarajan & A. Prasad, 2008. "Capital flows, exchange rate management and monetary policy," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 1(1), pages 135-149.

    More about this item

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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