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An Analysis of the Process of Capital Liberalization in Italy

Author

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  • Gordon M. Bodnar
  • Leonardo Bartolini

Abstract

Beginning in 1985 Italy embarked on a path of progressive removal of its system of controls on portfolio investment, a process formally completed with the abolition of all remaining restrictions in 1990. In this paper we review this policy of capital liberalization and integrate the analysis with an examination of the process of stabilization of the lira exchange rate in the 1980s. Various indicators of capital controls’ effectiveness and target zone credibility are used to identify the temporal relations among capital liberalization, exchange rate stabilization and capital flows.

Suggested Citation

  • Gordon M. Bodnar & Leonardo Bartolini, 1992. "An Analysis of the Process of Capital Liberalization in Italy," IMF Working Papers 92/27, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:92/27
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    Cited by:

    1. Bartolini, Leonardo & Drazen, Allan, 1997. "Capital-Account Liberalization as a Signal," American Economic Review, American Economic Association, vol. 87(1), pages 138-154, March.
    2. Elias Belessakos & Michael Papaioannou, 1996. "Simple credibility tests of the ERM bands for the pound sterling and the Italian lira," Open Economies Review, Springer, vol. 7(3), pages 219-236, July.

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