Davies, Victor A.B.2012-06-042012-06-042007-04https://hdl.handle.net/10986/7046The 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.CC BY 3.0 IGOACCOUNTINGACCRUALSASSETSAVERAGE LEVELBANKING SYSTEMBANKSBASKET OF GOODSBENCHMARKBENCHMARK INTEREST RATEBLACK MARKETBLACK MARKET PREMIUMCAPITAL BASECAPITAL CONTROLSCAPITAL FLIGHTCAPITAL INFLOWSCAPITALIZATIONCASH ACCOUNTINGCONSUMER PRICE INDEXDEBTDEPENDENT VARIABLEDEVALUATIONDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT REPORTDIRECT INVESTMENTDOMESTIC INVESTMENTDYNAMIC PANELECONOMETRIC ANALYSISECONOMETRICSECONOMIC ACTIVITYECONOMIC CONSEQUENCESECONOMIC DEVELOPMENTECONOMIC STUDIESEMPIRICAL EVIDENCEEMPIRICAL WORKEMPLOYMENTEMPLOYMENT EQUATIONSESTIMATION RESULTSESTIMATION TECHNIQUESEXCHANGE RATEEXOGENOUS VARIABLESEXPECTED RETURNEXPORTSEXTERNAL BORROWINGEXTERNAL DEBTEXTERNAL FACTORSFACTOR ENDOWMENTSFINANCIAL CRISISFINANCIAL MARKETSFLIGHT OF CAPITALFOREIGN ASSETSFOREIGN CAPITALFOREIGN CAPITAL FLOWSFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN INVESTMENTFORMAL ANALYSISFREE TRADEGDPHIGH INFLATIONHUMAN CAPITALINCOMEINCOME GROWTHINCOME LEVELSINFLATIONINFLATION RATEINFLATION RATESINFORMATION ASYMMETRYINTEREST PAYMENTSINTEREST RATESINTERNATIONAL DEBTINTERNATIONAL FINANCEINTERNATIONAL MONETARY FUNDINVESTMENT INCOMELAGGED DEPENDENTLAGGED LEVELSLDCSLOW INFLATIONMACROECONOMIC CONDITIONSMACROECONOMIC ENVIRONMENTMACROECONOMIC STABILITYNEGATIVE EFFECTNOMINAL CAPITALOPEN ECONOMYOPPORTUNITY COSTOVERVALUATIONPENALTIESPER CAPITA INCOMEPOLICY RESEARCHPOLITICAL ECONOMYPORTFOLIOPORTFOLIO INVESTMENTPORTFOLIOSPRICE LEVELSPRIVATE CAPITALPRODUCTIVITYPUBLIC DEBTRATES OF RETURNREAL EXCHANGE RATEREDUCING INFLATIONRISK PREMIUMSSERIAL CORRELATIONTAX POLICYTAX REVENUESTRADE REGIMETRANSACTIONS COSTSTREASURY BILLTRUST COMPANYWEALTHWorld Bank10.1596/1813-9450-4210