Robbing the Riches: Capital Flight, Institutions, and Instability

39 Pages Posted: 8 Nov 2005

See all articles by Valerie Cerra

Valerie Cerra

International Monetary Fund (IMF)

Meenakshi Rishi

Seattle University

Sweta C. Saxena

Bank for International Settlements (BIS) - Monetary and Economic Department

Multiple version iconThere are 2 versions of this paper

Date Written: October 2005

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.

Keywords: Capital Flight, Institutions, Debt; Foreign Aid, Revolving door

JEL Classification: F20, F34, F35, O17

Suggested Citation

Cerra, Valerie and Rishi, Meenakshi and Saxena, Sweta Chaman, Robbing the Riches: Capital Flight, Institutions, and Instability (October 2005). IMF Working Paper No. 05/199, Available at SSRN: https://ssrn.com/abstract=843024 or http://dx.doi.org/10.2139/ssrn.843024

Valerie Cerra (Contact Author)

International Monetary Fund (IMF) ( email )

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Meenakshi Rishi

Seattle University ( email )

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Seattle, WA 98122
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206-296-2078 (Phone)

Sweta Chaman Saxena

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

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CH-4002 Basel
Switzerland

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