Opposition to capital market opening
- We employ a neoclassical growth model to assess the impact of financial liberalization in a developing country on capital owners' and workers' consumption and welfare. We find for an average non-OECD country that capital owners suffer a 42% reduction in permanent consumption because capital inflows reduce their return to capital while workers gain 8% of permanent consumption because capital inflows increase wages. These huge gross impacts contrast with the small positive net effect found in a neoclassical representative agent model by Gourinchas and Jeanne (2006). Our findings provide an estimate of the amount of redistribution needed to overcome capitalists' opposition to capital inflows.
| Author details: | Philipp Engler, Alexander Wulff |
|---|---|
| DOI: | https://doi.org/10.1080/13504851.2013.868579 |
| ISSN: | 1350-4851 |
| ISSN: | 1466-4291 |
| Title of parent work (English): | Applied economics letters |
| Publisher: | Routledge, Taylor & Francis Group |
| Place of publishing: | Abingdon |
| Publication type: | Article |
| Language: | English |
| Year of first publication: | 2014 |
| Publication year: | 2014 |
| Release date: | 2017/03/27 |
| Tag: | capital flows; distributional effects; international financial integration |
| Volume: | 21 |
| Issue: | 6 |
| Number of pages: | 4 |
| First page: | 425 |
| Last Page: | 428 |
| Organizational units: | Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften |
| Peer review: | Referiert |
