Occasional Papers

Capital Account Liberalization: Theoretical and Practical Aspects

Author/Editor:

Michael Mussa ; Giovanni Dell'Ariccia ; Barry J. Eichengreen ; Enrica Detragiache

Publication Date:

September 30, 1998

Summary:

Capital account liberalization - orderly, properly sequence, and befitting the individual circumstances of countries- is an inevitable step for all countries wishing to realize the benefits of the globalized economy. This paper reviews the theories behind capital account liberalization and examines the dangers associated with free capital flows. The authors conclude that the dangers can be limited through a combination of sound macroeconomic and prudential policies.

Series:

Occasional Paper No. 1998/016

Subject:

Balance of payments Banking Capital account Capital account liberalization Capital controls Capital flows Commercial banks Financial institutions