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On the Definition and Magnitude of Recent Capital Flight

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  • Robert E. Cumby
  • Richard M. Levich

Abstract

This paper presents a survey of alternative definitions of capital flight and empirical estimates of capital flight utilizing a common database. At the conceptual level, we argue that the definition of capital flight requires a somewhat arbitrary distinction between normal capital flows and those representing capital flight. At the empirical level, our results illustrate the range of estimates of capital flight that are possible and how alternative definitions or databases contribute to the dispersion of estimates. Our results show that for some countries, differences in definitions or databases may have substantial effects, causing some estimates of capital flight to be positive and others negative. We argue that an appropriate definition of capital flight is one that is consistent with the kinds of economic questions under consideration. In theory, capital flight should be viewed within the context of a general equilibrium model. When this is done, capital flight will appear to be a symptom of underlying economic forces rather than a cause of national welfare losses.

Suggested Citation

  • Robert E. Cumby & Richard M. Levich, 1987. "On the Definition and Magnitude of Recent Capital Flight," NBER Working Papers 2275, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2275
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    1. Dooley, Michael & Helkie, William & Tryon, Ralph & Underwood, John, 1986. "An analysis of external debt positions of eight developing countries through 1990," Journal of Development Economics, Elsevier, vol. 21(2), pages 283-318, May.
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    Cited by:

    1. Sebastian Edwards, 1989. "Structural Adjustment Policies in Highly Indebted Countries," NBER Chapters,in: Developing Country Debt and Economic Performance, Volume 1: The International Financial System, pages 159-208 National Bureau of Economic Research, Inc.
    2. Jeffrey D. Sachs, 1989. "Introduction to "Developing Country Debt and the World Economy"," NBER Chapters,in: Developing Country Debt and the World Economy, pages 1-34 National Bureau of Economic Research, Inc.
    3. Lisa M. Schineller, 1997. "An econometric model of capital flight from developing countries," International Finance Discussion Papers 579, Board of Governors of the Federal Reserve System (U.S.).
    4. Frenkel, Jacob A & Razin, Assaf, 1987. "Fiscal Policies and the World Economy; An Intertemporal Approach (Cambridge, Mass.: MIT Press, 1987)," MPRA Paper 20438, University Library of Munich, Germany.
    5. Valerie Cerra & Meenakshi Rishi & Sweta Saxena, 2008. "Robbing the Riches: Capital Flight, Institutions and Debt," Journal of Development Studies, Taylor & Francis Journals, vol. 44(8), pages 1190-1213.
    6. Alesina, Alberto & Tabellini, Guido, 1989. "External debt, capital flight and political risk," Journal of International Economics, Elsevier, vol. 27(3-4), pages 199-220, November.
    7. Boyce, James K. & Zarsky, Lyuba, 1988. "Capital Flight from the Philippines, 1962-1986," Philippine Journal of Development JPD 1988 Vol. XV No. 2-c, Philippine Institute for Development Studies.
    8. Ramon-Ballester, Francisco & Wezel, Torsten, 2007. "International financial linkages of Latin American banks: the effects of political risk and deposit dollarisation," Working Paper Series 744, European Central Bank.
    9. repec:taf:rjapxx:v:7:y:2002:i:2:p:203-241 is not listed on IDEAS
    10. Gudmundsson, Gudmundur S. & Zoega, Gylfi, 2016. "A double-edged sword: High interest rates in capital control regimes," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-38.
    11. Lisa M. Schineller, 1997. "A nonlinear econometric analysis of capital flight," International Finance Discussion Papers 594, Board of Governors of the Federal Reserve System (U.S.).
    12. B.W. Smit & B.A. Mocke, 1991. "Capital Flight from South Africa: Magnitude and Causes," South African Journal of Economics, Economic Society of South Africa, vol. 59(2), pages 60-77, June.
    13. Liew, Siew-Ling, 2016. "Review on Determinants of Capital Flight," MPRA Paper 70445, University Library of Munich, Germany.
    14. Sweta Chaman Saxena & Meenakshi Rishi & Valerie Cerra, 2005. "Robbing the Riches; Capital Flight, Institutions, and Instability," IMF Working Papers 05/199, International Monetary Fund.
    15. Gunter, Frank R., 1996. "Capital flight from the People's Republic of China: 1984-1994," China Economic Review, Elsevier, vol. 7(1), pages 77-96.

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