Capital market liberalization: Optimal tradeoff and bargaining delay
Baomin Dong1; Xinhua Gu2; Huasheng Song3
2017
Source PublicationNorth American Journal of Economics and Finance
ABS Journal Level2
ISSN10629408
Volume39Pages:78-88
Abstract

Host and investing countries are faced with a tradeoff between growth and volatility arising from capital flows. The host country seeks capital inflows for high growth, yet worries about accompanying volatility so much that it limits capital market opening due to its financial weakness. However, the investing country solicits quick and safe returns from capital outflows by requesting wide foreign openness. It is often observed that one side's push for opening encounters the other side's reluctance. We examine how this conflict of interest is resolved for international compromise equilibrium through sequential bargaining between the two sides with private valuations of capital flows. We find that openness bargaining can end up with strategic delay after information revelation. This finding sheds light on certain puzzles in international finance.

KeywordFinancial Integration Volatility Growth Capital Controls Bargaining
DOIhttps://doi.org/10.1016/j.najef.2016.12.003
URLView the original
Indexed BySSCI
Language英语
WOS Research AreaBusiness & Economics
WOS SubjectBusiness, Finance ; Economics
WOS IDWOS:000392457300006
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Cited Times [WOS]:0   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionDEPARTMENT OF FINANCE AND BUSINESS ECONOMICS
Corresponding AuthorHuasheng Song
Affiliation1.College of Economics, Henan University, China
2.Faculty of Business Administration, University of Macau, Macao
3.CRPE and College of Economics, Zhejiang University, China
Recommended Citation
GB/T 7714
Baomin Dong,Xinhua Gu,Huasheng Song. Capital market liberalization: Optimal tradeoff and bargaining delay[J]. North American Journal of Economics and Finance,2017,39:78-88.
APA Baomin Dong,Xinhua Gu,&Huasheng Song.(2017).Capital market liberalization: Optimal tradeoff and bargaining delay.North American Journal of Economics and Finance,39,78-88.
MLA Baomin Dong,et al."Capital market liberalization: Optimal tradeoff and bargaining delay".North American Journal of Economics and Finance 39(2017):78-88.
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