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Capital Mobility for Developing Countries May Not Be So High

Author

Listed:
  • Thomas D. Willett

    (Claremont McKenna College and Claremont Graduate University)

  • Young Seok Ahn

    (Korea Development Institute)

  • Manfred W. Keil

    (Claremont McKenna College)

Abstract

International capital flows to developing countries have taken on considerable policy importance in recent years. There is disagreement, however, about whether financial capital mobility has become so high that developing countries have little ability to sterilize capital flows. This paper reviews several popular methods of estimating the degree of capital mobility for developing countries and shows that they are subject to potentially important upward biases due to inappropriate assumptions concerning the roles of domestic inflation and sterilization. Corrections for these factors can cut estimates of capital mobility by one half or more.

Suggested Citation

  • 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.
  • Handle: RePEc:clm:clmeco:2000-26
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    File URL: http://www.claremontmckenna.edu/rdschool/papers/2000-26.pdf
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    References listed on IDEAS

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    Cited by:

    1. Felmingham, Bruce & Leong, SuSan, 2005. "Parity conditions and the efficiency of the Australian 90- and 180-day forward markets," Review of Financial Economics, Elsevier, vol. 14(2), pages 127-145.

    More about this item

    Keywords

    sterilization; capital mobility; developing countries;

    JEL classification:

    • F3 - International Economics - - International Finance
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • G0 - Financial Economics - - General

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