Font Size: a A A

On Capital Account Liberalization And The International Balance Of Payments Structure Can Be Maintained,

Posted on:2006-09-26Degree:DoctorType:Dissertation
Country:ChinaCandidate:Y G ZhuFull Text:PDF
GTID:1116360155960461Subject:Finance
Abstract/Summary:PDF Full Text Request
Capital account convertibility (CAC) is a heatedly deputed and inevitable problem. It is so-called to be heatedly deputed, because since 1980s economists have disagreed with each other about the CAC approaches and conditions etc. It is so-called to be inevitable, because with the globalization and integration of economies round the world, the capital regulation policies confront with more and more challenges, and CAC become a trend.CAC is a two-edged sword. The dissertation argues that the sustainability of structure of Balance of Payment (BOP) is the core of successful CAC. International finance is a discipline, which analyzes how to achieve internal and external equilibrium from the aspect of money and finance. CAC is a part of international finance, so the research on CAC should obligate to the frame. The definition of the sustainability of structure of BOP is: if the structure of BOP is compatible with the policy of internal equilibrium, we can say that the structure of BOP is sustainable. There are six chapters in the dissertation:The first chapter is Introduction. The chapter firstly analyzes the necessity of RMB's CAC, and then surveys the present researches on CAC. We find that the present researches have no integral analyzing frame. According to the characterization of the discipline, we point out that the sustainability of structure of Balance of Payment (BOP) is the core of successful CAC.The second chapter analyzes that the connection between the sustainability of structure of BOP and CAC. The first part analyzes the linkage between approach of CAC and the sustainability of structure of BOP. Besides of the traditional approaches —gradual approach and radical approach, the integral approach has recently been put forward. We find that the integral approach and the sustainability of structure of BOP are essentially same. The second part analyzes the linkage between conditions for CAC and the sustainability of structure of BOP. We find the conditions presently argued are static, but the key condition for successful CAC is that CAC can help achieve the internal and external equilibrium, which is identical to the sustainability of structure of BOP. The third part analyzes the linkage between international illiquidity and the sustainability of structure of BOP. The present explanations are somehow flawed, we argue that the international illiquidity crisis be avoided, if onlythe internal and external equilibrium could be achieved.The third chapter analyzes that how CAC can help achieve the internal equilibrium. The first part analyzes the mechanism to stabilize the price under the CAC. Under the CAC, the central bank is willing to deflate the price, and set up a nominal anchor. The fix exchange regime is generally selected as a nominal anchor, but is often offended by speculative attack. The inflation target regime has been popularly selected round the world. The second part analyzes the mechanism to stabilize the exchange rate. Based the portfolio model of exchange rate, we analyze that how the government apply the level of interest rate to stabilize the exchange rate. The third part analyzes the linkage between the CAC and economic growth. Despite of the large disputes, based on Chinese data, we find that capital inflow can promote the economic growth and growth efficiency. The fourth part analyzes an important mechanism to promote the growth efficiency, by means of adjusting the financing structure.The fourth chapter analyzes the relation of mutual coverage among the main accounts of BOP and the relation of intertemporal coverage of main accounts. The first part analyzes the relation of mutual coverage of goods trade account, service trade account, investment income account, and foreign direct investment. Based on Chinese situations, the second part points out the implement of FDI should connect with the foster of the industrial cluster. The third part analyzes that intertemporal coverage of current account. After analyzing the model by Obstfled and Rogoff (1996) ,we find the theory is not applicable to the developing countries. To achieve the intertemporal coverage of current account, the developing country should implement the dynamic comparative advantage strategy.The fifth chapter analyzes that the mechanism of sustainability of capital inflow. Sustainability of capital inflow is important for the successful CAC. The first part analyzes the definition, influent factors, and the negative effects on the sustainability of structure of Balance of Payment from the excessive inflow. The second part analyzes how to achieve the sustainability of capital inflow, from three different forms of inflows—bank loan, portfolio capital and FDI. After analyzing the domestic and international moral hazard on the bank loans, the excessive inflow and home bias of portfolio capital, and the greenland investment and international A&M of FDI, we find that the corporation governance make differences.Based on the previous analysis and the present alarming indictors system of BOP,...
Keywords/Search Tags:Capital account convertibility, the sustainability of structure of Balance of Payment, internal equilibrium, external equilibrium
PDF Full Text Request
Related items