Opposition to Capital Market opening
Engler, Philipp ;  Wulff, Alexander ;  ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleOpposition to Capital Market opening
AuthorEngler, Philipp
AuthorWulff, Alexander
EditorUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages27 S.
Series ; 2011,17 : Economics
KeywordsCapital flows; international financial integration; growth; neoclassical model; heterogenous agents
Classification (DDC)332 Financial economics
337 International economics
AbstractWe employ a neoclassical growth model to assess the impact of
financial liberalization in a developing country on capital owners` and
workers` consumption and welfare. We find in a baseline calibration
for an average non-OECD country that capitalists suffer a 42 percent
reduction in permanent consumption because capital inflows reduce
their return to capital while workers gain 8 percent of permanent con-
sumption because capital inflows increase wages. These huge gross
impacts contrast with the small positive net effect found in a neoclas-
sical represent agent model by Gourinchas and Jeanne (2006). We
further show that the result for capitalists is insensitive to enhanced
productivity catch-up processes induced by capital inflows. Our find-
ings can help explain why poorer countries tend to be less financially
open as capitalists` losses are largest for countries with the lowest
capital stocks, inducing strong opposition to capital market opening.
If your browser can't open the file, please download the file first and then open it
FU DepartmentDepartment Business and Economics
Other affiliation(s)Lehrstuhl für Geldtheorie und Geldpolitik
Year of publication2011
Type of documentBook
Terms of use/Rights Nutzungsbedingungen
Created at2011-09-26 : 10:17:32
Last changed2016-01-05 : 02:38:25
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000011821