Private Capital Flows, Capital Controls, and Default Risk∗
نویسنده
چکیده
What has been the effect of the shift in emerging market capital flows toward private sector borrowers? Are emerging markets capital flows more efficient? If not, can controls on capital flows improve welfare? This paper studies these questions in a world with two forms of default risk. When private loans are enforceable, but there is the risk of national default, constrained efficient capital flows can be decentralized with private borrowing subject to individual borrowing constraints: no capital controls are necessary. However, when private agents may individually default, private lending is inefficient, and capital flow subsidies are potentially Pareto-improving. JEL Classification: F21, F34, F41, O19.
منابع مشابه
STANFORD CENTER FOR INTERNATIONAL DEVELOPMENT Working Paper No . 225 Private Capital Flows , Capital Controls , and Default Risk
What has been the effect of the shift in emerging market capital flows toward private sector borrowers? Are emerging market capital flows more efficient? If not, can controls on capital flows improve welfare? This paper shows that the answers depend on the form of default risk. When private loans are enforceable, but there is the risk that the government will default on behalf of all residents,...
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