An Econometric Rational-Expectations Macroeconomic Model for Developing Countries with Capital Controls

30 Pages Posted: 15 Feb 2006

See all articles by Nadeem Ul Haque

Nadeem Ul Haque

Pakistan Institute of Development Economics

Kajal Lahiri

State University of New York (SUNY) at Albany, College of Arts and Sciences, Economics

Peter J. Montiel

Williams College - Department of Economics

Date Written: February 1990

Abstract

A small macroeconomic model based on familiar theoretical considerations is developed and estimated using data from 31 developing countries. Efficient estimation techniques are used to control for country heterogeneity under the assumption of rational expectations. The estimates and the test statistics suggest that the model could serve well as a framework for developing-country macroeconomic analysis. An interesting feature of the specification of the model is that it allows the hypothesis of capital mobility to be explicitly tested. The empirical analysis suggests that on average developing countries tend to exhibit a high degree of capital mobility.

JEL Classification: 131, 431

Suggested Citation

Ul Haque, Nadeem and Lahiri, Kajal and Montiel, Peter J., An Econometric Rational-Expectations Macroeconomic Model for Developing Countries with Capital Controls (February 1990). IMF Working Paper, Vol. , pp. 1-30, 1990. Available at SSRN: https://ssrn.com/abstract=884577

Nadeem Ul Haque (Contact Author)

Pakistan Institute of Development Economics ( email )

Quaid-i-Azam University Campus, P.O. Box. 1091
Islamabad, Capital 44000
Pakistan
+92-51-9217879 (Phone)
+92-51-9210886 (Fax)

HOME PAGE: http://www.saneinetwork.net/structure/st_comm/NadeemUlHaque.asp

Kajal Lahiri

State University of New York (SUNY) at Albany, College of Arts and Sciences, Economics ( email )

Department of Economics
1400 Washington Avenue
Albany, NY 12222
United States
518-442 4758 (Phone)
518-442 4736 (Fax)

HOME PAGE: http://www.albany.edu/~klahiri

Peter J. Montiel

Williams College - Department of Economics ( email )

Fernald House
Office: Fernald 14
Williamstown, MA 01267
United States
413-597-2103 (Phone)
413-597-4045 (Fax)

HOME PAGE: http://www.williams.edu/Economics/faculty/montiel.htm

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