TY  - JOUR
AU  - Aizenman,Joshua
TI  - Tariff Liberalization Policy and Financial Restrictions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1253
PY  - 1986
Y2  - April 1986
UR  - http://www.nber.org/papers/w1253
L1  - http://www.nber.org/papers/w1253.pdf
N1  - Author contact info:
Joshua Aizenman
Economics and SIR
USC
University Park
Los Angeles, CA 90089-0043
Tel: 213-740-4066
E-Mail: aizenman@usc.edu
AB  - The purpose of this paper is to assess how restrictions on capital mobility affect adjustment to a tariff liberalization policy. This is done by comparing the adlustment process under free and restricted convertibility of foreign assets in a regime where the commercial exchange rate is pegged. It is shown that trade liberalization causes in the short run a larger drop in domestic goods prices and a smaller current account deficit in a regime with restricted convertibility. Similar results apply also for the long-run current account effects of the liberalization: they are smaller under financial restrictions.
ER  -