Capital Account Openness in Low-income Developing Countries: Evidence from a New Database

December 23, 2016

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Format: Chicago

Sarwat Jahan, and Daili Wang. Capital Account Openness in Low-income Developing Countries: Evidence from a New Database, (USA: International Monetary Fund, 2016) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The relevance of recording and assessing countries’ capital flow management measures is well-recognized, but very few studies have focused on low-income developing countries (LIDCs). A key constraint is the lack of an appropriate index to measure the openness of capital account and its change over time. This paper fills the gap by constructing a de jure index based on information contained in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions. It provides an aggregate index to capture the overall openness of the capital account, and also provides a breakdown of openness for various subcategories of capital flows. The new database covers 164 countries with information on 12 types of asset categories over the period 1996–2013. The index provides the largest coverage of LIDCs among all existing indices and also provides granularity on openness across asset types, direction of flows and residency. The paper examines the link between de jure capital account openness with de facto capital flows and outlines potential applications of this database.

Subject: Balance of payments, Capital account, Capital account liberalization, Capital controls, Capital flows, Foreign direct investment

Keywords: Asia and Pacific, Capital account, Capital account, Capital account liberalization, Capital account openness, Capital controls, Capital flow management measure, Capital flows, East Asia, Exchange arrangement, Financial interconnectedness, Financial market liberalization, Foreign direct investment, Frontier economy, Index exercise, Liberalization, Low-income developing countries, Market, Openness, Openness index, South Asia, Sub-Saharan Africa, Transaction liberalization, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/252
Stock No:

WPIEA2016252
ISBN:

9781475563191
ISSN:

1018-5941

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