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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/314

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contributor.authorFaia, Ester-
date.accessioned2007-03-05T12:02:17Z-
date.available2007-03-05T12:02:17Z-
date.issued2007-03-
identifier.urihttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=962668-
identifier.urihttp://hdl.handle.net/2108/314-
description.abstractIn recent decades, capital account liberalization in emerging economies has often been followed by a surge in capital inflows, despite the presence of severe informational asymmetries for foreign lenders. Empirical studies have shown that in emerging economies financial liberalization has led to an increase in consumption volatility (also relative to output). I use a small open economy model where foreign lending to households is constrained by an endogenous borrowing limit. Borrowing is secured by collateral in the form of durable investment whose accumulation is subject to adjustment costs. This economy is able to replicate the aforementioned stylized fact in response to various shocks (productivity, foreign demand and government expenditure). I find that financial liberalization reduces welfare since it increases the volatility of consumption and employment.en
format.extent2657642 bytes-
format.mimetypeapplication/pdf-
language.isoenen
publisherCEISen
relation.ispartofseriesCEIS Tor Vergata Research Paper; 96en
subjectendogenous borrowing limiten
subjectfinancial liberalizationen
subjectconsumption volatilityen
titleWelfare implications of capital account liberalizationen
typeArticleen
subject.jelE52; Monetary policy (targets, instruments, and effects)en
subject.jelF1; Tradeen
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