Abstract
We present a two-country OLG economy in which international capital mobility exists in the presence of moral hazard in financial contracts. The difference in the extent of asymmetric information is a source of capital movement and capital flows from the South to the North. Even though there exists a unique steady state under autarky, multiple locally stable steady states may emerge in a world economy with an integrated capital market. However, the integration may drive the South down to further impoverishment. The South's government therefore should take into account seriously the timing of capital market liberalization as a conduit of economic development.
| Original language | English |
|---|---|
| Pages (from-to) | 1-24 |
| Number of pages | 24 |
| Journal | International Economic Review |
| Volume | 42 |
| Issue number | 1 |
| Publication status | Published - 2001 Feb |
| Externally published | Yes |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Capital flight, north-south lending, and stages of economic development. / Sakuragawa, Masaya; Hamada, Koichi.
In: International Economic Review, Vol. 42, No. 1, 02.2001, p. 1-24.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Capital flight, north-south lending, and stages of economic development
AU - Sakuragawa, Masaya
AU - Hamada, Koichi
PY - 2001/2
Y1 - 2001/2
N2 - We present a two-country OLG economy in which international capital mobility exists in the presence of moral hazard in financial contracts. The difference in the extent of asymmetric information is a source of capital movement and capital flows from the South to the North. Even though there exists a unique steady state under autarky, multiple locally stable steady states may emerge in a world economy with an integrated capital market. However, the integration may drive the South down to further impoverishment. The South's government therefore should take into account seriously the timing of capital market liberalization as a conduit of economic development.
AB - We present a two-country OLG economy in which international capital mobility exists in the presence of moral hazard in financial contracts. The difference in the extent of asymmetric information is a source of capital movement and capital flows from the South to the North. Even though there exists a unique steady state under autarky, multiple locally stable steady states may emerge in a world economy with an integrated capital market. However, the integration may drive the South down to further impoverishment. The South's government therefore should take into account seriously the timing of capital market liberalization as a conduit of economic development.
UR - http://www.scopus.com/inward/record.url?scp=0347626974&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0347626974&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:0347626974
VL - 42
SP - 1
EP - 24
JO - International Economic Review
JF - International Economic Review
SN - 0020-6598
IS - 1
ER -