Titelaufnahme

Titel
Dilemma and global financial cycle : evidence from capital account liberalisation episodes / Xiang Li
VerfasserLi, Xiang
ErschienenHalle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, [08. Dezember 2021]
Ausgabe
This version: October 2021
Umfang1 Online-Ressource (III, 40 Seiten, A21, 2,85 MB) : Diagramme
SpracheEnglisch
SerieIWH-Diskussionspapiere ; 2021, no. 13 (December 2021)
Schlagwörteraverage treatment effect / capital control / global financial cycle / monetary policy autonomy / propensity score matching / trilemma
URNurn:nbn:de:gbv:3:2-144417 
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Dilemma and global financial cycle [2.85 mb]
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By focusing on the episodes of substantial capital account liberalisation and adopting a new methodology this paper provides new evidence on the dilemma and global financial cycle theory. I first identify the capital account liberalisation episodes for 95 countries from 1970 to 2016 and then employ an augmented inverse propensity score weighted (AIPW) estimator to calculate the average treatment effect (ATE) of opening capital account on the interest rate comovements with the core country. Results show that opening capital account causes a country to lose its monetary policy independence and a floating exchange rate regime cannot shield this effect. Moreover the impact is stronger when liberalising outward and banking flows.