Arbeitspapier
Political Risk and Capital Flight
Capital flight often amounts to a substantial proportion of GDP when developing countries face crises. This paper presents a portfolio choice model that relates capital flight to rate of return differentials, risk aversion, and three types of risk: financial risk, political risk, and policy risk. Estimating the equilibrium capital flight equation for a panel of 47 developing countries over 16 years, we show that all three types of risk have a statistically significant impact on capital flight. Quantitatively, political risk is the most important factor causing capital flight. We also identify several political factors that reduce capital flight by signaling market-oriented reforms are imminent.
- Sprache
-
Englisch
- Erschienen in
-
Series: Claremont Colleges Working Papers in Economics ; No. 2001-10
- Klassifikation
-
Wirtschaft
Capitalist Systems: Political Economy
- Thema
-
capital flight
political risk
policy risk
portfolio choice
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Le, Quan
Zak, Paul J.
- Ereignis
-
Veröffentlichung
- (wer)
-
Claremont McKenna College, Department of Economics
- (wo)
-
Claremont, CA
- (wann)
-
2001
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Le, Quan
- Zak, Paul J.
- Claremont McKenna College, Department of Economics
Entstanden
- 2001
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