Publication: Capital Flight and War
Date
2007-04
ISSN
Published
2007-04
Author(s)
Davies, Victor A.B.
Abstract
The author provides empirical evidence
on the effects of inflation on post-war capital flight
flows. He tests the hypothesis that inflation has a positive
additional impact on capital flight flows after war. He uses
a new panel dataset of 77 developing countries, of which 35
experienced at least one episode of war between 1971 and
2000. The author uses a range of estimation methods and four
capital flight measures-Cline, World Bank Residual, Morgan
Guarantee, and Dooley. The results consistently support the
research hypothesis: Post-war inflation increases annual
capital flight flows by about 0.005 to 0.01 percentage
points of GDP. This effect is substantial in total at high
inflation rates. The implication is that low inflation helps
to curb capital flight in post-conflict economies.
Citation
“Davies, Victor A.B.. 2007. Capital Flight and War. Policy Research Working Paper; No. 4210. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/778999c2-4beb-5b77-ab1a-ebac520ceea8 License: CC BY 3.0 IGO.”
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