Paper #552

Títol:

Convertibility, currency controls and the cost of capital in Western Europe, 1950-1999

Autor:

Hans Joachim Voth

Data:

Maig 2001

Resum:

For most of the post-war period, Europe�s capital markets remained largely closed to international capital flows. This paper explores the costs of this policy. Using an event-study methodology, I examine the extent to which restrictions of current and capital account convertibility affected stock returns. The delayed introduction of full currency convertibility increased the cost of capital. Also, a string of measures designed to reduce capital mobility before the ultimate collapse of the Bretton Woods System had considerable negative effects. These findings offer an explanation for the mounting evidence suggesting that capital account liberalization facilitates growth.

Paraules clau:

Cost of capital, liberalization, current account, capital account, convertibility

Codis JEL:

F21, G15

Àrea de Recerca:

Història Econòmica i de l'Empresa

Publicat a:

International Journal of Finance & Economics, 8 (2003), 3, pp. 255-276

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