| Description |
1 online resource (62 pages) |
| Series |
IMF Working Paper ; WP/18/83 |
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IMF working paper ; WP/18/83.
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| Contents |
Cover; Contents; I. INTRODUCTION; II. DATA; A. Country-Level Data; 1. Capital Account Liberalization; 2. Output and Inequality; B. Industry-Level-Data; 1. External Financial Dependance; 2. Natural Layoff Rate; 3. Elasticity of Substitution between Capital and Labor; III. EMPIRICAL METHODOLOGY; A. Country-Level Approach; 1. Baseline; 2. Accounting for Differential and Threshold Effects; B. Industry-Level Approach; IV. RESULTS; A. Country-Level Analysis; 1. Addressing Endogeneity; 2. Liberalization vs Flows; 3. Threshold Effects; B. Industry-Level Analysis; 1. Robustness Checks; V. CONCLUSIONS |
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FIGURESFigure 1. The Aggregate and Distributional Effects of Capital Account Liberalization; Figure 2. The Aggregate and Distributional Effects of Capital Account Liberalization-Additional Controls; Figure 3. The Aggregate and Distributional Effects of Capital Account Liberalization-Controlling for Expected Future Growth; Figure 4. The Aggregate and Distributional Effects of Capital Account Liberalization-Controlling for Two Lags of the Dependent Variables; Figure 5. The Aggregate and Distributional Effects of Capital Account Liberalization-IV |
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Figure 6. The Medium-Term Aggregate and Distributional Effects of Capital Account Liberalization-High vs Low FlowsFigure 7. The Medium-Term Aggregate and Distributional Effects of Capital Account Liberalization-The Role of Institutions and Crises; Figure 8. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and its Components; Figure 9. The Differential Effect of Capital Account Liberalization Episodes on the Labor Share |
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Figure 10. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and Labor Share-Controlling for Trade ReformsFigure 11. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and Labor Share-Controlling for Current Account Reforms; Figure 12. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and Labor Share-Controlling for Domestic Financial Liberalization Reforms |
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Figure 13. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and Labor Share-Controlling for Product Market ReformsFigure 14. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and Labor Share-Controlling for Labor Market (EPL) Reforms; Figure 15. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and Labor Share-Controlling for Union Density; Figure 16. The Differential Effect of Capital Account Liberalization Episodes on Sectoral Output and Labor Share-Controlling for Technology |
| Summary |
We take a fresh look at the aggregate and distributional effects of policies to liberalize international capital flows-financial globalization. Both country- and industry-level results suggest that such policies have led on average to limited output gains while contributing to significant increases in inequality-that is, they pose an equity-efficiency trade-off. Behind this average lies considerable heterogeneity in effects depending on country characteristics. Liberalization increases output in countries with high financial depth and those that avoid financial crises, while distributional effects are more pronounced in countries with low financial depth and inclusion and where liberalization is followed by a crisis. Difference-indifference estimates using sectoral data suggest that liberalization episodes reduce the share of labor income, particularly for industries with higher external financial dependence, those with a higher natural propensity to use layoffs to adjust to idiosyncratic shocks, and those with a higher elasticity of substitution between capital and labor. The sectoral results underpin a causal interpretation of the findings using macro data |
| Bibliography |
Includes bibliographical references |
| Notes |
Figure 17. The Differential Effect of Capital Account Liberalization Episodes on the Labor Share-Controlling for Sectoral Growth |
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Print version record |
| Subject |
Capital movements.
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Globalization.
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globalism.
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BUSINESS & ECONOMICS -- Finance.
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Capital movements
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Globalization
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Globalization.
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All Countries.
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| Form |
Electronic book
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| Author |
Loungani, Prakash, author.
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Ostry, Jonathan David, 1962- author.
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| ISBN |
9781484352144 |
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1484352149 |
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1484350898 |
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9781484350898 |
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