TY  - JOUR
AU  - Bartolini,Leonardo
AU  - Drazen,Allan
TI  - Capital Account Liberalization as a Signal
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5725
PY  - 1997
Y2  - July 1997
UR  - http://www.nber.org/papers/w5725
L1  - http://www.nber.org/papers/w5725.pdf
N1  - Author contact info:
Leonardo Bartolini
Federal Reserve Bank of New York
33 Liberty Street
New York, NY  10045
E-Mail: leo.bartolini@ny.frb.org

Allan Drazen
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3477
Fax: 301/405-7835
E-Mail: drazen@econ.umd.edu
AB  - We present a model in which a government's current capital controls policy signals future policies.  Controls on capital outflows evolve in response to news on technology, conditional on government attitudes towards taxation of capital.  When there is uncertainty over government types, a policy of liberal capital outflows sends a favorable signal that may trigger a capital inflow.  This prediction is consistent with the experience of several countries that have liberalized their capital account
ER  -