Capital flight, north-south lending, and stages of economic development

Masaya Sakuragawa, Koichi Hamada

Research output: Contribution to journalArticle

7 Citations (Scopus)

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 languageEnglish
Pages (from-to)1-24
Number of pages24
JournalInternational Economic Review
Volume42
Issue number1
Publication statusPublished - 2001 Feb
Externally publishedYes

Fingerprint

Capital markets
Lending
Economic development
Capital flight
Capital movements
International capital mobility
Market liberalization
Moral hazard
Integrated
Capital flows
World economy
Asymmetric information
Government
Financial contracts

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 journalArticle

@article{e2d1e30115a24016955861c288cc290b,
title = "Capital flight, north-south lending, and stages of economic development",
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.",
author = "Masaya Sakuragawa and Koichi Hamada",
year = "2001",
month = "2",
language = "English",
volume = "42",
pages = "1--24",
journal = "International Economic Review",
issn = "0020-6598",
publisher = "Wiley-Blackwell",
number = "1",

}

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 -