NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Order of Liberalization of the Current and Capital Accounts of the Balance of Payments

Sebastian Edwards

NBER Working Paper No. 1507 (Also Reprint No. r0941)
Issued in November 1987
NBER Program(s):   ITI   IFM

The opening up of an economy to the rest of the world has generally been considered an integral part of economic reform aimed at increasing the role of markets. Until recently, however, very little discussion was devoted to the order in which the capital and current account should be liberalized indeveloping countries.This paper deals with several aspects of the order of liberalization. The different arguments usually given to advocate a particular ordering are critically reviewed. Then a three-good two-factor model is used to analyze the effects of alternative ordering on production and income distribution. A two-period model of a small economy is also used to investigate the welfare effects of opening the capital account in the presence of distortions. While the discussion does not yield a theorem regarding the appropriate order of liberalization, there are strong presumptions that it is more prudent to liberalize the current account first.

download in pdf format
   (1052 K)

download in djvu format
   (591 K)

email paper

This paper is available as PDF (1052 K) or DjVu (591 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Edwards, Sebastian. "The Order of Liberalization of the Current and Capital Accounts of the Balance of Payments," Economic Liberalization in Developing Countries, eds. A.C. Choksi and D. Papageorgious, Oxford: Basi Blackwell , 1986.

Users who downloaded this paper also downloaded these:
Edwards w2162 The Liberalization of the Current Capital Accounts and the Real ExchangeRate
Henry w12698 Capital Account Liberalization: Theory, Evidence, and Speculation
Edison, Klein, Ricci, and Sloek w9100 Capital Account Liberalization and Economic Performance: Survey and Synthesis
Chari and Henry w8908 Capital Account Liberalization: Allocative Efficiency or Animal Spirits?
Kouri w0644 Balance of Payments and the Foreign Exchange Market: A Dynamic Partial Equilibrium Model
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us