TY - JOUR
T1 - Capital market openness and output volatility
AU - Hwang, Kwang Myoung
AU - Park, Donghyun
AU - Shin, Kwanho
PY - 2013/8
Y1 - 2013/8
N2 - In this paper, using data from 21 advanced and 81 developing countries during 1971-2010, we empirically examine the impact of capital market openness on output volatility. We find that opening of capital markets increases the output volatility of developing countries. Furthermore, we find that the main channel through which capital market openness increases volatility is currency and external-debt crisis. Finally, we find that while Asian countries are less likely to experience a crisis, they become even more unstable than other developing countries once a crisis occurs. Our evidence strengthens the case for caution in developing countries' opening up of their capital markets.
AB - In this paper, using data from 21 advanced and 81 developing countries during 1971-2010, we empirically examine the impact of capital market openness on output volatility. We find that opening of capital markets increases the output volatility of developing countries. Furthermore, we find that the main channel through which capital market openness increases volatility is currency and external-debt crisis. Finally, we find that while Asian countries are less likely to experience a crisis, they become even more unstable than other developing countries once a crisis occurs. Our evidence strengthens the case for caution in developing countries' opening up of their capital markets.
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U2 - 10.1111/1468-0106.12031
DO - 10.1111/1468-0106.12031
M3 - Article
AN - SCOPUS:84881279082
VL - 18
SP - 403
EP - 430
JO - Pacific Economic Review
JF - Pacific Economic Review
SN - 1361-374X
IS - 3
ER -