Does Capital Scarcity Matter?

Anusha Chari, Peter Blair Henry, Racha Moussa

NBER Working Paper No. 23921
Issued in October 2017
NBER Program(s):Economic Fluctuations and Growth, International Finance and Macroeconomics

This paper quantifies the welfare impact of a permanent increase in the level of per capita income brought about by a temporary increase in the growth rate of GDP per capita following capital account liberalization. In the immediate aftermath of liberalization, and under a range of assumptions, differences between the autarkic and integrated equilibrium consumption paths are large. Yet the welfare impact of these differences is small when using infinite horizon consumption streams to compute welfare gains. The results suggest that a finite horizon framework may be more appropriate and policy-relevant for evaluating the welfare consequences of economic policy changes that induce temporary growth effects but have a permanent impact on the level of per capita incomes.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23921

Users who downloaded this paper also downloaded* these:
Aghion, Jones, and Jones w23928 Artificial Intelligence and Economic Growth
Romer and Romer w23931 Why Some Times Are Different: Macroeconomic Policy and the Aftermath of Financial Crises
Cesa-Bianchi, Ferrero, and Rebucci w23841 International Credit Supply Shocks
Farhi and Tirole w23930 Shadow Banking and the Four Pillars of Traditional Financial Intermediation
Cheung, Palivos, Wang, Wang, and Yip w23937 Dynamic Trade, Endogenous Institutions and the Colonization of Hong Kong: A Staged Development Framework
NBER Videos

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

Contact Us