Paper #552

Título:

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

Autor:

Hans Joachim Voth

Fecha:

Mayo 2001

Resumen:

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.

Palabras clave:

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

Códigos JEL:

F21, G15

Área de investigación:

História Económica y de la Empresa

Publicado en:

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

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