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.
- Language
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Englisch
- Bibliographic citation
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Series: Claremont Colleges Working Papers in Economics ; No. 2001-10
- Classification
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Wirtschaft
Capitalist Systems: Political Economy
- Subject
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capital flight
political risk
policy risk
portfolio choice
- Event
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Geistige Schöpfung
- (who)
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Le, Quan
Zak, Paul J.
- Event
-
Veröffentlichung
- (who)
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Claremont McKenna College, Department of Economics
- (where)
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Claremont, CA
- (when)
-
2001
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Le, Quan
- Zak, Paul J.
- Claremont McKenna College, Department of Economics
Time of origin
- 2001
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