Capital controls and financial crises:
The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital market do...
Gespeichert in:
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| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
1999
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| Schriftenreihe: | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series
7398 |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Zusammenfassung: | The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital market domestic agents can borrow internationally, but foreign agents cannot hold domestic equity. We identify conditions under which the emerging market's capitalists would oppose financial reform. This would be the case if 'green field' investment by multinationals would bid up real wages, reducing thereby the rents of domestic capitalists. A financial crisis that raises the domestic interest rate and causes a real exchange rate depreciation may induce the emerging market's capitalists to support opening up the economy to FDI. This attitude switch is more likely to occur the greater the debt overhang, the lower the borrowing constraint, and the weaker the market power of foreign entrepreneurs. Even in these circumstances, the emerging market's capitalists would prefer a partial reform to a comprehensive one -- they would prefer to maintain the restrictions on 'green field' FDI. |
| Beschreibung: | 22 S. graph. Darst. |
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| 490 | 1 | |a National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |v 7398 | |
| 520 | |a The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital market domestic agents can borrow internationally, but foreign agents cannot hold domestic equity. We identify conditions under which the emerging market's capitalists would oppose financial reform. This would be the case if 'green field' investment by multinationals would bid up real wages, reducing thereby the rents of domestic capitalists. A financial crisis that raises the domestic interest rate and causes a real exchange rate depreciation may induce the emerging market's capitalists to support opening up the economy to FDI. This attitude switch is more likely to occur the greater the debt overhang, the lower the borrowing constraint, and the weaker the market power of foreign entrepreneurs. Even in these circumstances, the emerging market's capitalists would prefer a partial reform to a comprehensive one -- they would prefer to maintain the restrictions on 'green field' FDI. | ||
| 650 | 4 | |a Capital controls | |
| 650 | 4 | |a Entwicklungsländer | |
| 650 | 4 | |a Politik | |
| 650 | 4 | |a Ökonometrisches Modell | |
| 650 | 4 | |a Capital market |x Government policy |z Developing countries |x Econometric models | |
| 650 | 4 | |a Capital movements |x Government policy |z Developing countries |x Econometric models | |
| 650 | 4 | |a Devaluation of currency |z Developing countries |x Econometric models | |
| 650 | 4 | |a Financial crises |x Government policy |z Developing countries |x Econometric models | |
| 650 | 4 | |a Foreign exchange rates |z Developing countries |x Econometric models | |
| 650 | 4 | |a Investments, Foreign |x Government policy |z Developing countries |x Econometric models | |
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| id | DE-604.BV013180766 |
| illustrated | Illustrated |
| indexdate | 2024-07-09T18:40:23Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-008980380 |
| oclc_num | 42878445 |
| open_access_boolean | 1 |
| owner | DE-521 |
| owner_facet | DE-521 |
| physical | 22 S. graph. Darst. |
| publishDate | 1999 |
| publishDateSearch | 1999 |
| publishDateSort | 1999 |
| record_format | marc |
| series | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| series2 | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| spelling | Aizenman, Joshua 1949- Verfasser (DE-588)124080057 aut Capital controls and financial crises Joshua Aizenman Cambridge, Mass. 1999 22 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 7398 The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital market domestic agents can borrow internationally, but foreign agents cannot hold domestic equity. We identify conditions under which the emerging market's capitalists would oppose financial reform. This would be the case if 'green field' investment by multinationals would bid up real wages, reducing thereby the rents of domestic capitalists. A financial crisis that raises the domestic interest rate and causes a real exchange rate depreciation may induce the emerging market's capitalists to support opening up the economy to FDI. This attitude switch is more likely to occur the greater the debt overhang, the lower the borrowing constraint, and the weaker the market power of foreign entrepreneurs. Even in these circumstances, the emerging market's capitalists would prefer a partial reform to a comprehensive one -- they would prefer to maintain the restrictions on 'green field' FDI. Capital controls Entwicklungsländer Politik Ökonometrisches Modell Capital market Government policy Developing countries Econometric models Capital movements Government policy Developing countries Econometric models Devaluation of currency Developing countries Econometric models Financial crises Government policy Developing countries Econometric models Foreign exchange rates Developing countries Econometric models Investments, Foreign Government policy Developing countries Econometric models Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 7398 (DE-604)BV002801238 7398 http://papers.nber.org/papers/w7398.pdf kostenfrei Volltext |
| spellingShingle | Aizenman, Joshua 1949- Capital controls and financial crises National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series Capital controls Entwicklungsländer Politik Ökonometrisches Modell Capital market Government policy Developing countries Econometric models Capital movements Government policy Developing countries Econometric models Devaluation of currency Developing countries Econometric models Financial crises Government policy Developing countries Econometric models Foreign exchange rates Developing countries Econometric models Investments, Foreign Government policy Developing countries Econometric models |
| title | Capital controls and financial crises |
| title_auth | Capital controls and financial crises |
| title_exact_search | Capital controls and financial crises |
| title_full | Capital controls and financial crises Joshua Aizenman |
| title_fullStr | Capital controls and financial crises Joshua Aizenman |
| title_full_unstemmed | Capital controls and financial crises Joshua Aizenman |
| title_short | Capital controls and financial crises |
| title_sort | capital controls and financial crises |
| topic | Capital controls Entwicklungsländer Politik Ökonometrisches Modell Capital market Government policy Developing countries Econometric models Capital movements Government policy Developing countries Econometric models Devaluation of currency Developing countries Econometric models Financial crises Government policy Developing countries Econometric models Foreign exchange rates Developing countries Econometric models Investments, Foreign Government policy Developing countries Econometric models |
| topic_facet | Capital controls Entwicklungsländer Politik Ökonometrisches Modell Capital market Government policy Developing countries Econometric models Capital movements Government policy Developing countries Econometric models Devaluation of currency Developing countries Econometric models Financial crises Government policy Developing countries Econometric models Foreign exchange rates Developing countries Econometric models Investments, Foreign Government policy Developing countries Econometric models |
| url | http://papers.nber.org/papers/w7398.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT aizenmanjoshua capitalcontrolsandfinancialcrises |