Capital Account Policies, IMF Programs and Growth in Developing Regions

22 Pages Posted: 24 Jan 2015

See all articles by Zorobabel Bicaba

Zorobabel Bicaba

African Development Bank

Zuzana Brixiova

International Monetary Fund (IMF) - European Department; African Development Bank

Mthuli Ncube

BARBICAN Asset Management; London School of Economics & Political Science (LSE) - Financial Markets Group

Multiple version iconThere are 2 versions of this paper

Abstract

This paper develops an adaptive learning model under uncertainty that examines evolution of capital account polices over time and across developing regions. In the framework, countries' past experiences and IMF programs influence policymakers' beliefs about the impact of capital account liberalization on growth, under the 'Mundell's trilemma constraint. The model, calibrated to data for Africa, Latin America and developing Asia, reflects relatively well capital account policies adopted in 1980-2010. It shows that even more developed countries with liberalized capital accounts may revert to controls under large output shocks. The outcomes of capital account switches are better and closer to policymakers' expectations in countries with the IMF programs, underscoring the role of complementarity of policies.

Keywords: adaptive learning, dynamics of capital account policies, growth, IMF programs

JEL Classification: F43, O4, O43, O55

Suggested Citation

Bicaba, Zorobabel and Brixiova, Zuzana and Ncube, Mthuli, Capital Account Policies, IMF Programs and Growth in Developing Regions. IZA Discussion Paper No. 8774, Available at SSRN: https://ssrn.com/abstract=2554922 or http://dx.doi.org/10.2139/ssrn.2554922

Zorobabel Bicaba (Contact Author)

African Development Bank ( email )

Zuzana Brixiova

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7000 (Phone)
202-623-4661 (Fax)

African Development Bank ( email )

Rue Joseph Anoma
01 BP 1387
Ivory Coast (Cote D'ivoire)

Mthuli Ncube

BARBICAN Asset Management ( email )

London School of Economics & Political Science (LSE) - Financial Markets Group

Houghton Street
London WC2A 2AE
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
49
Abstract Views
405
PlumX Metrics