Financial liberalization has led to financial deepening and higher growth in several countries. However, it has also led to a greater incidence of financial crises. Here, we review the empirical evidence on these dual effects of financial liberalization across different groups of countries. We then present a conceptual framework that explains why there is a trade-off between growth and incidenc...

The majority of OECD countries has experienced a reduction in the volatility of output during the last two decades. This period is also characterized by the liberalization of the capital accounts of these countries. This paper examines whether capital markets liberalization can lead to lower macroeconomic volatility. We study a business cycle model with multiple countries and financial market f...

The well-known question whether regional trade agreements (RTAs) and the multilateral trading system (MTS) are “strangers, friends, or foes” (Bhagwati and Panagariya, 1996) has gained new importance with the widespread proliferation of RTAs in recent years. Based on an extensive data set which covers most of world trade over the past 60 years and about 240 regional trade agreements, we analyze ...

The well-known question whether regional trade agreements (RTAs) and the multilateral trading system (MTS) are “strangers, friends, or foes” (Bhagwati and Panagariya, 1996) has gained new importance with the widespread proliferation of RTAs in recent years. Based on an extensive data set which covers most of world trade over the past 60 years and about 240 regional trade agreements, we analyze ...

Contrary to the predictions of standard economic theory, capital market liberalization has been a mixed blessing for many countries. Liberalization of debt inflows exposes economies to the risk of crises stemming from sudden changes in investor sentiment. Equity market liberalizations, on the other hand, have promoted growth in almost every liberalizing country. Yet equity market liberalization...

The majority of OECD countries has experienced a reduction in macroeconomic volatility during the last two decades. This period is also characterized by a gradual liberalization of the capital accounts of from these countries. The goal of this paper is to study whether capital markets liberalization can lead to lower macroeconomic volatility. We study a business cycle model with multiple countr...

Does trade liberalization foster total factor productivity (TFP) growth in the manufacturing sector? Does sectoral trade orientation determine sectoral TFP levels and growth rates? These questions are addressed using pooled pre-and post-liberalization panel data from Cameroonian firms of eight manufacturing industries. A single production function for the whole manufacturing sector is estimated...

Why does the current wave of globalization create more public concern/opposition than previous rounds of trade liberalization? This paper identifies a key difference between globalization and trade liberalization that could be responsible for it. It is shown that while both globalization and trade liberalization create inter-sector income distribution, the former also creates intra-sector incom...