Robbing the Riches: Capital Flight, Institutions, and Instability

Abstract:     
Capital flight may undermine economic growth and the effectiveness of debt relief and foreign aid. This paper is the first attempt to test whether unsound macroeconomic policies or weak institutions lead to capital flight using panel data for a large set of developing emerging market and transition countries. In addition the paper tests the revolving door hypothesis that links debt accumulation and capital flight and analyzes the contribution of institutions to several channels in this relationship.

Number of Pages in PDF File: 39

Keywords: Capital Flight, Institutions, Debt, Foreign Aid

JEL Classification: F20, F34, F35, O17

working papers series