Capital flight and war

No 4210, Policy Research Working Paper Series from The World Bank

Abstract: The author provides empirical evidence on the effects of inflation on post-war capital flight flows. He tests the hypothesis that inflation has a positive additional impact on capital flight flows after war. He uses a new panel dataset of 77 developing countries, of which 35 experienced at least one episode of war between 1971 and 2000. The author uses a range of estimation methods and four capital flight measures-Cline, World Bank Residual, Morgan Guarantee, and Dooley. The results consistently support the research hypothesis: Post-war inflation increases annual capital flight flows by about 0.005 to 0.01 percentage points of GDP. This effect is substantial in total at high inflation rates. The implication is that low inflation helps to curb capital flight in post-conflict economies.

Keywords: Economic Theory&Research; Banks&Banking Reform; Investment and Investment Climate; Settlement of Investment Disputes; Achieving Shared Growth (search for similar items in EconPapers)
Date: 2007-04-01
New Economics Papers: this item is included in nep-afr, nep-dev and nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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