Summary of Opening Up to Inequity

Looking for the article?
We have the summary! Get the key insights in just 5 minutes.

Opening Up to Inequity summary
Start getting smarter:
or see our plans

Rating

9 Overall

9 Importance

9 Innovation

8 Style


Recommendation

Policy makers have struggled with the issue of capital account convertibility for generations. In the past, the International Monetary Fund treated the economic growth benefits of free capital flows as an act of faith. But by 2012, the IMF’s understanding of the subject had become far more nuanced. It continues to advocate convertibility, yet it acknowledges that governments need to consider the downsides. In this informative research report, IMF economists Davide Furceri and Prakash Loungani explain why convertibility can worsen financial volatility and income distribution, and they offer cautionary counsel on how governments can lessen the adverse effects of capital mobility. getAbstract recommends this concise but well-argued article to policy makers, central bankers and investors.

In this summary, you will learn

  • What different positions policy makers have taken on capital account convertibility and
  • How liberalizing the movement of capital across borders can affect a country’s income distribution and risk of financial crises.
 

About the Authors

Davide Furceri is an economist at the International Monetary Fund, where Prakash Loungani is a division chief.

 

Summary

In theory, countries stand to gain from the free cross-border movement of capital. In the past, the International Monetary Fund promoted capital account convertibility to boost economic growth. For instance, at its October 1997 annual meeting, a senior IMF official called liberalization “an inevitable...

More on this topic

By the same authors

Gone with the Headwinds
Gone with the Headwinds
8
World Trade in Services
World Trade in Services
8
Neoliberalism: Oversold?
Neoliberalism: Oversold?
8
Okun’s Law
Okun’s Law
7

Customers who read this summary also read

Making the Best of Brexit for the EU27 Financial System
Making the Best of Brexit for the EU27 Financial System
8
Cracking the Emerging Markets Enigma
Cracking the Emerging Markets Enigma
7
Bank Capital Redux
Bank Capital Redux
8
Systemic Risk in the Financial System
Systemic Risk in the Financial System
8
Policies to Ensure Asia’s Sustained Economic Success
Policies to Ensure Asia’s Sustained Economic Success
7
People Get Ready
People Get Ready
8

Related Channels

Comment on this summary