A Pragmatic Approach to Capital Account Liberalization

Eswar Prasad and Raghuram Rajan

No 3475, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Cross-country regressions suggest little connection from foreign capital inflows to more rapid economic growth for developing countries and emerging markets. This suggests that the lack of domestic savings is not the primary constraint on growth in these economies, as implicitly assumed in the benchmark neoclassical framework. We explore emerging new theories on both the costs and benefits of capital account liberalization, and suggest how one might adopt a pragmatic approach to the process.

Keywords: collateral benefits; capital controls; capital account liberalization; thresholds (search for similar items in EconPapers)
JEL-codes: F2 F3 F4 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2008-04
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (156)

Published - published in: Journal of Economic Perspectives, 2008, 22 (3), 149-172

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Journal Article: A Pragmatic Approach to Capital Account Liberalization (2008)
Working Paper: A Pragmatic Approach to Capital Account Liberalization (2008)
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