Welfare gains from financial liberalization
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Townsend_Welfare gains.pdf
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612.73 KB
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Author(s)
Townsend, Robert
Ueda, Kenichi
Date Issued
August 2010
Journal
International Economic Review
Publisher
John Wiley & Sons, Inc.
Citation
Townsend, . R. M. and Ueda, K. (2010), WELFARE GAINS FROM FINANCIAL LIBERALIZATION. International Economic Review, 51: 553–597. doi: 10.1111/j.1468-2354.2010.00593.x
Version
Author's final manuscript
Abstract
Financial liberalization has been a controversial issue, as empirical evidence for growth enhancing
effects is mixed. Here, we find sizable welfare gains from liberalization (cost to repression), though
the gain in economic growth is ambiguous. We take the view that financial liberalization is a
government policy that alters the path of financial deepening, while financial deepening is
endogenously chosen by agents given a policy and occurs in transition towards a distant steady state.
This history-dependent view necessitates the use of simulation analysis based on a growth model.
Our application is a specific episode: Thailand from 1976 to 1996.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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DOI of Published Version
http://dx.doi.org/10.1111/j.1468-2354.2010.00593.x
