IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-02169129.html
   My bibliography  Save this paper

Global Imbalances and Capital Account Openness: An Empirical Analysis

Author

Listed:
  • Jamel Saadaoui

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)

Abstract

We investigate if capital account openness has played a major role in the evolution of global imbalances on the period 1980-2003. We estimate, with panel regression techniques, the impact of capital account openness on medium run current account imbalances for industrialized and emerging countries by using a de jure measure of capital account openness (the Chinn-Ito index of capital account openness, 2002, 2006) and a de facto measure of capital account openness (the gross foreign assets measured as the sum of foreign assets and foreign liabilities). By increasing the opportunities of overseas investments, the relative capital account openness has had positive impact on medium run current account balances of industrialized countries (because of downward pressures on domestic investment rates). Conversely, the relative capital account openness has had negative impact on medium run current account balances of emerging countries (because of upward pressures on domestic investment rates). The evolutions of domestic and foreign capital account openness have allowed increasing medium run current account balances in absolute value during this period.

Suggested Citation

  • Jamel Saadaoui, 2013. "Global Imbalances and Capital Account Openness: An Empirical Analysis," Post-Print hal-02169129, HAL.
    • Handle: RePEc:hal:journl:hal-02169129
    DOI: 10.2139/ssrn.1961328
    Note: View the original document on HAL open archive server: https://hal.science/hal-02169129
    as

    Download full text from publisher

    File URL: https://hal.science/hal-02169129/document
    Download Restriction: no
    File URL: https://libkey.io/10.2139/ssrn.1961328?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Chinn, Menzie D. & Ito, Hiro, 2006. "What matters for financial development? Capital controls, institutions, and interactions," Journal of Development Economics, Elsevier, vol. 81(1), pages 163-192, October.
    2. Chinn, Menzie D. & Prasad, Eswar S., 2003. "Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration," Journal of International Economics, Elsevier, vol. 59(1), pages 47-76, January.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. Chinn, Menzie D. & Ito, Hiro, 2007. "Current account balances, financial development and institutions: Assaying the world "saving glut"," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 546-569, June.
    5. Menzie D. Chinn & Barry Eichengreen & Hiro Ito, 2014. "A forensic analysis of global imbalances," Oxford Economic Papers, Oxford University Press, vol. 66(2), pages 465-490.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2007. "Direct Investment, Rising Real Wages and the Absorption of Excess Labor in the Periphery," NBER Chapters, in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 103-132, National Bureau of Economic Research, Inc.
    8. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    9. Dennis P. Quinn & A. Maria Toyoda, 2008. "Does Capital Account Liberalization Lead to Growth?," The Review of Financial Studies, Society for Financial Studies, vol. 21(3), pages 1403-1449, May.
    10. Fabrizio Carmignani, 2008. "Does capital account liberalisation promote economic growth? Evidence from system estimation," Economics Bulletin, AccessEcon, vol. 6(49), pages 1-13.
    11. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    12. repec:ebl:ecbull:v:6:y:2008:i:49:p:1-13 is not listed on IDEAS
    13. Hiro Ito & Menzie Chinn, 2009. "East Asia and Global Imbalances: Saving, Investment, and Financial Development," NBER Chapters, in: Financial Sector Development in the Pacific Rim, pages 117-150, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jamel Saadaoui, 2013. "Global Imbalances and Capital Account Openness: an Empirical Analysis," Post-Print halshs-00861161, HAL.
    2. Jamel Saadaoui, 2013. "Global Imbalances and Capital Account Openness: an Empirical Analysis," Working Papers of BETA 2013-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Saadaoui, Jamel, 2012. "Déséquilibres globaux, taux de change d’équilibre et modélisation stock-flux cohérente [Global Imbalances, Equilibrium Exchange Rates and Stock-Flow Consistent Modelling]," MPRA Paper 51332, University Library of Munich, Germany.
    4. Jamel Saadaoui, 2015. "Does financial openness explain the increase of global imbalances before the crisis of 2008?," International Economics, CEPII research center, issue 143, pages 23-35.
    5. Das, Debasish Kumar, 2012. "Determinants of current account imbalances in the global economy: A dynamic panel analysis," MPRA Paper 42419, University Library of Munich, Germany.
    6. Saadaoui, Jamel, 2011. "Global imbalances and capital account openness: an empirical analysis," MPRA Paper 35453, University Library of Munich, Germany.
    7. repec:hal:cepnwp:halshs-00641456 is not listed on IDEAS
    8. Rihab Bousnina & Srdjan Redzepagic & Foued Badr Gabsi, 2021. "Sustainability of current account balances in MENA countries: threshold cointegration approach," Economic Change and Restructuring, Springer, vol. 54(1), pages 241-264, February.
    9. Ari Aisen & David Hauner, 2013. "Budget deficits and interest rates: a fresh perspective," Applied Economics, Taylor & Francis Journals, vol. 45(17), pages 2501-2510, June.
    10. Afonso, António & Huart, Florence & Tovar Jalles, João & Stanek, Piotr, 2022. "Twin deficits revisited: A role for fiscal institutions?," Journal of International Money and Finance, Elsevier, vol. 121(C).
    11. Florian Morvillier, 2018. "On the impact of the launch of the euro on EMU macroeconomic vulnerability," EconomiX Working Papers 2018-51, University of Paris Nanterre, EconomiX.
    12. Cevik Serhan & Jalles Joao, 2024. "Eye of the Storm: The Impact of Climate Shocks on Inflation and Growth," Review of Economics, De Gruyter, vol. 75(2), pages 109-138.
    13. Serhan Cevik & Tianle Zhu, 2020. "Trinity Strikes Back: Monetary Independence And Inflation In The Caribbean," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(3), pages 375-388, April.
    14. Ca’ Zorzi, Michele & Chudik, Alexander & Dieppe, Alistair, 2012. "Thousands of models, one story: Current account imbalances in the global economy," Journal of International Money and Finance, Elsevier, vol. 31(6), pages 1319-1338.
    15. Florian Morvillier, 2018. "On the impact of the launch of the euro on EMU macroeconomic vulnerability," Working Papers hal-04141675, HAL.
    16. Matthias Busse & Jens Königer & Peter Nunnenkamp, 2010. "FDI promotion through bilateral investment treaties: more than a bit?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(1), pages 147-177, April.
    17. Okada, Keisuke, 2013. "The interaction effects of financial openness and institutions on international capital flows," Journal of Macroeconomics, Elsevier, vol. 35(C), pages 131-143.
    18. Kunieda, Takuma & Okada, Keisuke & Shibata, Akihisa, 2011. "Corruption, Globalization, and Economic Growth: Theory and Evidence," MPRA Paper 35355, University Library of Munich, Germany.
    19. Chinn, Menzie D. & Ito, Hiro, 2022. "A Requiem for “Blame It on Beijing” interpreting rotating global current account surpluses," Journal of International Money and Finance, Elsevier, vol. 121(C).
    20. Gnimassoun, Blaise, 2015. "The importance of the exchange rate regime in limiting current account imbalances in sub-Saharan African countries," Journal of International Money and Finance, Elsevier, vol. 53(C), pages 36-74.
    21. Tran Manh Ha & Doan Ngoc Thang, 2023. "Economic sanction and global sourcing complexity: A cross‐country analysis," The World Economy, Wiley Blackwell, vol. 46(4), pages 1017-1050, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-02169129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.