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Title:Contagious Policies: An Analysis of Spatial Interactions Among Countries' Capital Account Policies PDF Logo
Authors:Steiner, Andreas
Issue Date:2010
Series/Report no.:Proceedings of the German Development Economics Conference, Hannover 2010 41
Abstract:Countries' capital account policies might be contagious in the sense that domestic policies are driven by other countries' policies. A model of strategic interactions is developed to show that countries' best response to policy changes elsewhere consists in imitating this policy. Using a spatial econometric model, the hypothesis of policy interactions is tested in a large panel data set. The evidence shows that capital account policies are contemporaneously correlated across countries. Concerning fundamentals, the move to a fixed exchange rate regime and an increase in real world interest rates are correlated with the imposition of capital account restrictions.
Subjects:Capital Controls
Strategic Interaction
Panel Data Analysis
JEL:C23
F21
F3
F42
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2010 (Hannover)

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