Financing the transition: Risks and benefits of integrating into the international capital market

Arbeitspapier

This paper surveys the theoretical and empirical evidence on capital account convertibility and assesses its relevance for the reform states of Central and Eastern Europe. Its major findings are that domestic investment conditions matter and that domestic policies can reduce the risk of an abrupt reversal of capital flows. Policymakers must stand ready to adjust the exchange rate but also their fiscal and monetary policies once signs of overheating appear. The effectiveness of controls on capital flows is highly questionable. Moreover, capital controls raise the irreversibility of investment projects and may cause the postponement of investment decisions. The countries under review have made substantial progress towards capital account convertibility and should continue on this track as they strive for membership in the EU.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Year: 1997 ; Kiel: Institut für Weltwirtschaft (IfW)

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; Current Account Adjustment; Short-term Capital Movements ; Open Economy Macroeconomics
• Subject: Kapitalmarktliberalisierung ; Kapitalmobilität ; Direktinvestition ; Übergangswirtschaft ; Wirtschaftspolitik ; Leistungsbilanz ; Osteuropa

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Buch, Claudia M. ; Heinrich, Ralph P.
• Event: Veröffentlichung
• (who): Kiel Institute of World Economics (IfW) ; ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel
• (when): 1997

Further information

• Handle: http://hdl.handle.net/10419/47088
• Last update: 10.03.2025, 11:44 AM CET