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What are the Real Effects of Liberalizing International Capital Movements?

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  • Daniele Checchi

Abstract

Progress in financial integration calls for the abolition of capital controls, especially within the European community. Traditional analysis would then predict a better reallocation of productive capacity at the international level. A formal model is developed in order to show that it is impossible to draw unequivocal conclusions; moreover, when financial investors are allowed to allocate their wealth in public bonds, and governments pursue full employment targets, cases exist where the financial liberalization produces a reduction in capital accumulation in both the participating countries. Copyright Kluwer Academic Publishers 1992

Suggested Citation

  • Daniele Checchi, 1992. "What are the Real Effects of Liberalizing International Capital Movements?," Open Economies Review, Springer, vol. 3(1), pages 83-125, February.
    • Handle: RePEc:kap:openec:v:3:y:1992:i:1:p:83-125
    DOI: 10.1007/BF01886183
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