Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/55347
Authors: 
Blouin, Arthur
Ghosal, Sayantan
Mukand, Sharun
Year of Publication: 
2012
Series/Report no.: 
CESifo working paper: Monetary Policy and International Finance 3715
Abstract: 
We analyze whether or not the globalization of capital, disciplines governments and improves governance. We demonstrate that globalization affects governance, by increasing a country's vulnerability to sudden capital flight. This increased threat of capital flight can discipline governments and improve governance and welfare by placing countries in a golden straitjacket. However, globalization may also overdiscipline governments - resulting in a perverse impact on governmental incentives that catalyzes (mis)governance. Accordingly, the paper suggests a novel (and qualified) role for capital controls. Finally, we provide some suggestive evidence consistent with the predictions from our theoretical framework.
Subjects: 
globalization
governance
capital flight
capital controls
discipline
JEL: 
F55
F36
Document Type: 
Working Paper

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