| 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. |