Research On The Threshold Effect And Path Of Capital Account Opening

China's 40-year practical experience shows that opening to the outside world is an important driving force for social and economic development.Generally international experience shows that the capital account liberalization will be realized after 7 years of current account liberalization.It has been 22 years since China realized its current account liberalization in 1996,however there are still many controls on China's capital account.Even in the assessment of the International Monetary Fund,China is a country with a relatively low degree of capital account liberalization.Regarding the path arrangement of capital account liberalization,since there is no strict international standard,it needs to be determined according to each country's economic structure and development characteristics.The People's Bank of China gave relevant suggestions in 2012:“First liberalize capital inflow and then capital outflow,first liberalize long-term capital and then liberalize short-term capital,first liberalize direct investment and then liberalize indirect investment,first liberalize institutional investment and then liberalize individual investment,divided into short-term arrangement,medium-term arrangement,long-term arrangement and future arrangement,"and specific timetable is given.Since the People's Bank of China put forward the proposal to speed up the liberalization of China's capital account,it has aroused great repercussions in the academic and political circles.Experts who have raised objections believe that the current is not a strategic opportunity for capital account liberalization,and once the regulation is quickly relaxed,China will face more external impacts than external opportunities.At present,China's economy is under the background of the new normal.The realization of high-quality development in the future must be carried out under more open conditions.At the same time,China is facing a more complicated and severe economic and political situation at home and abroad.Under such circumstances,it is of great significance to find a sound and orderly path to liberalize the capital account and minimize economic fluctuations while reaping the dividends of liberalization.This dissertation takes the domestic and foreign scholars' research on capital account liberalization as the logical starting point of analysis,combing the relevant literature,China's capital account liberalization and cross-border capital flow channels.In the empirical analysis part,firstly,cross-border capital is divided into direct investment,equity investment and debt investment according to its nature,and countries are divided into low-and middle-income countries and high-income countries.Systematic GMM estimation is used to study the impact of different types of capital account liberalization on economic growth and to examine country differences.Countries are divided into low-and middle-income countries and high-income countries,and GMM is used to estimate and study the impact of different types of capital account liberalization on economic growth and to examine country differences.On this basis,the initial conditions are introduced to establish a dynamic panel threshold model,to analyze the impact of initial conditions on the effectiveness of capital account liberalization,to study the threshold effects of different types of capital account liberalization,to solve the endogenous problems of the model and to explain the reasons for the differences between countries.Then cross-border capital is divided into short-term capital and long-term capital according to the term structure of capital flows.TVP-SV-VAR model is used to investigate the impact of cross-border capital flows with different terms on China's foreign exchange market,money market,stock market and output growth.Finally,the dissertation analyzes and studies the international cases of capital account liberalization in Mexico,Thailand,Chile and South Korea,providing experience and enlightenment for China's capital account liberalization.This study found:(1)China's laws and regulations still have more restrictions on the capital account,so it cannot be said that China's capital account liberalization is relatively high.Although in fact various types of capital flows are relatively large in scale,some need to resort to circuitous methods or even illegal acts.The gap between the legal and factual levels reflects the limited effectiveness of China's capital control.(2)Capital account liberalization has country-by-country differences,and the growth effect of capital account liberalization in high-income countries is significantly greater than that in low-and middle-income countries.Moreover,cross-border capital is heterogeneous.Different types of capital accounts have different effects on economic growth.The economic effect of liberalizing direct investment is greater than that of liberalizing equity investment,and the growth effect of liberalizing debt investment is the smallest.(3)By establishing a dynamic threshold model and introducing five indicators of initial conditions,namely,system quality,monetary policy,fiscal policy,trade openness and financial development,it is found that the impact of capital account liberalization on economic growth is non-linear.When a country's initial conditions are low,capital account liberalization is not conducive to economic growth,while when the initial conditions cross the threshold,capital account liberalization shows a positive growth effect.Combined with capital heterogeneity and threshold effect,it is found that the threshold requirement of direct investment liberalization is the lowest and the economic effect is the largest.The threshold requirement of debt investment liberalization is the highest and the economic effect is the lowest.The threshold effect of equity investment liberalization is between the first two.(4)The five initial conditions of China's system quality,monetary policy,fiscal policy,trade openness and financial development have all crossed the minimum threshold requirements,indicating that China's macroeconomic conditions are good and are in the dividend range of capital account liberalization.(5)Comparing the impact of long-term and short-term cross-border capital flows on economy and finance,the impact of short-term capital on exchange rate is uncertain,and long-term capital inflow will allow RMB to appreciate in the short term;Short-term capital flow will increase money supply,while the impact of FDI on money supply is uncertain.The short-term capital inflow will hold up the stock price in the current period,but it will also make the stock price fall later,which is not conducive to the stability of the stock market.However,the long-term capital flow has little to do with the stock price trend.The impact of short-term capital inflow on growth is positive in some years and negative in some years,while the impact of FDI on growth is relatively stable and continues to be positive.(6)From the perspective of economic and financial impact on cross-border capital flows,exchange rate appreciation,can attract short-term capital inflows for a long time,but it can only attract FDI;in a short time.The increase of money supply can attract short-term capital inflow in the long run,but it can only attract FDI;in the medium and short term.Rising stock prices will attract short-term capital inflows in the short and medium term,but this attraction will disappear in the long run,and the attraction of rising stock prices to FDI will gradually increase after the"stock crash"in 2008.The host country's economic growth is the reason for the increase in the scale of foreign direct investment,but it is not the reason for attracting short-term capital.(7)Learning from international cases,Mexico's premature capital account liberalization because the initial conditions did not meet the threshold requirements is the cause of the financial crisis.Comparing the different effects of capital account liberalization between Thailand and Chile,it illustrates the importance of open mode,capital flow management and exchange rate system.South Korea's special chaebol,exchange rate system and external pressure from the United States are similar to China's current situation,and its lessons from capital account liberalization are worth learning.Finally,combining the basic conclusions and the characteristics of China's economic development,the dissertation puts forward some thoughts on the path of China's capital account liberalization in the new era and relevant policy suggestions.This paper holds that capital account liberalization should take the improvement of initial conditions as the basis of liberalization,and the liberalization path should follow the positive gradual mode and the principle of orderly liberalization.Support the "the belt and road initiative" with capital account liberalization,continue to improve the development of China's financial market,and actively establish macro-prudential supervision of cross-border capital flows.