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

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  • Coulibaly, Brahima

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.

Suggested Citation

  • Coulibaly, Brahima, 2009. "Effects of financial autarky and integration: The case of the South Africa embargo," Journal of International Money and Finance, Elsevier, vol. 28(3), pages 454-478, April.
  • Handle: RePEc:eee:jimfin:v:28:y:2009:i:3:p:454-478
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    References listed on IDEAS

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    Cited by:

    1. Simplice A, Asongu, 2011. "Globalization, financial crisis and contagion: time-dynamic evidence from financial markets of developing countries," MPRA Paper 30120, University Library of Munich, Germany.
    2. Simplice A. Asongu, 2012. "The 2011 Japanese earthquake, tsunami and nuclear crisis: Evidence of contagion from international financial markets," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 4(4), pages 340-353, November.
    3. Asongu Simplice, 2013. "Globalization and Financial Market Contagion: Evidence from Financial Crisis and Natural Disasters," Working Papers 13/035, African Governance and Development Institute..
    4. Bank for International Settlements, 2009. "Capital flows and emerging market economies," CGFS Papers, Bank for International Settlements, number 33.

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