The European Union is now preparing for the entry of ten new members. As the accession countries (ACs) embark on the next phase of the path toward formal entry into the EU, most are expected to join the Exchange Rate Mechanism (ERM-II), prior to adoption of the euro. This period will be a time of heightened vulnerability to financial instability, requiring extremely adept economic management. With limited exchange rate flexibility under ERM-II, disinflationary conditions, and no exemptions from full international capital mobility, EU accession countries are likely to experience large 'convergence play' capital inflows - such inflows arise because investment opportunities are large but domest...
This new edition of the Code presents the full text of the Code, setting out the rights and obligations of adhering countries. It also shows how far each of the 34 adhering countries is open to international capital movements, as of March 2011.
The full text of the Code of Liberalisation of Capital Movements sets out the legally binding obligations accepted by OECD members. The Code, regularly updated by decisions of the OECD Council, reflects all changes in the positions of members up to 1 January 2003.
International financial liberalization may alter saving-investment imbalances and patterns of capital flows across countries. In a panel of OECD countries for 1990–96, this study examines how the liberalization of capital movements and financial services trade affects net private capital flows. Capital inflows tend to fall (rise) with the liberalization of commercial presence in banking and securities (insurance) services, possibly reflecting an increase (decrease) in saving. Capital account liberalization is found to stimulate capital inflows, suggesting that better access to external financing helps sustain larger fiscal and current account deficits. When cross-border trade is liberalized, capital flows change insignificantly.
This paper reviews the theoretical literature on the question of how long-term international capital movements depend on the international distribution of technology. It focuses on long-term investment flows, as these are more affected by international differences in technologies than short-term financial flows. International capital movements are investigated in the context of various technology specifications, ranging from models with only one common technology to those with multiple and endogenous technologies. The paper demonstrates that the theoretical specification of technology is crucial to the prediction of the size and direction of international capital movements.