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Capital flight and political risk

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  • Lensink, Robert
  • Hermes, Niels
  • Murinde, Victor

Abstract

This paper investigates asymmetric effects of monetary policy over the business cycle. A two-state Markov Switching Model is employed to model both recessions and expansions. For the United States and Germany, strong evidence is found that monetary policy is more effective in a recession than during a boom. Also some evidence is found for asymmetry in the United Kingdom and Belgium. In the Netherlands, monetary policy is not very effective in either regime.
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Suggested Citation

  • Lensink, Robert & Hermes, Niels & Murinde, Victor, 2000. "Capital flight and political risk," Journal of International Money and Finance, Elsevier, vol. 19(1), pages 73-92, February.
    • Handle: RePEc:eee:jimfin:v:19:y:2000:i:1:p:73-92
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