Arbeitspapier

Dilemma and global financial cycle: Evidence from capital account liberalisation episodes

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By focusing on the episodes of substantial capital account liberalisation and adopting a new methodology, this paper provides new evidence on the dilemma and global financial cycle theory. I first identify the capital account liberalisation episodes for 95 countries from 1970 to 2016, and then employ an augmented inverse propensity score weighted (AIPW) estimator to calculate the average treatment effect (ATE) of opening capital account on the interest rate comovements with the core country. Results show that opening capital account causes a country to lose its monetary policy independence, and a floating exchange rate regime cannot shield this effect. Moreover, the impact is stronger when liberalising outward and banking flows.

Sprache
Englisch

Erschienen in
Series: IWH Discussion Papers ; No. 13/2021

Klassifikation
Wirtschaft
Monetary Policy
Current Account Adjustment; Short-term Capital Movements
International Monetary Arrangements and Institutions
International Policy Coordination and Transmission
Thema
average treatment effect
capital control
global financial cycle
monetary policy autonomy
propensity score matching
trilemma

Ereignis
Geistige Schöpfung
(wer)
Li, Xiang
Ereignis
Veröffentlichung
(wer)
Halle Institute for Economic Research (IWH)
(wo)
Halle (Saale)
(wann)
2021

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Li, Xiang
  • Halle Institute for Economic Research (IWH)

Entstanden

  • 2021

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