TY  - JOUR
AU  - Henry,Peter Blair
TI  - Capital Account Liberalization: Theory, Evidence, and Speculation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12698
PY  - 2006
Y2  - November 2006
UR  - http://www.nber.org/papers/w12698
L1  - http://www.nber.org/papers/w12698.pdf
N1  - Author contact info:
Peter Blair Henry
Stern School of Business
New York University
44 West 4th Street, 11-58
New York, NY 10012
Tel: 212/998-0909
E-Mail: pbhenry@stern.nyu.edu
AB  - Writings on the macroeconomic impact of capital account liberalization find few, if any, robust effects of liberalization on real variables.  In contrast to the prevailing wisdom, I argue that the textbook theory of liberalization holds up quite well to a critical reading of this literature.  The lion's share of papers that find no effect of liberalization on real variables tell us nothing about the empirical validity of the theory, because they do not really test it.  This paper explains why it is that most studies do not really address the theory they set out to test.  It also discusses what is necessary to test the theory and examines papers that have done so.  Studies that actually test the theory show that liberalization has significant effects on the cost of capital, investment, and economic growth.
ER  -