|
|
Restricting capital outflow |
Roni Frish - Bank of Israel
Published at the Economics of Governance, Vol. 8, 2007, 153-177
|
|---|
|
| Abstract |
|---|
|
|
According to the "capital Asset Pricing Model" an individual can increase his utility by diversifying his capital across countries. If that is the case, then why do governments impose restrictions on capital outflow? This paper argues that foreign owners of capital have less political power then domestic ones and therefore capital liberalization weakens the political power that protects capital, increases the taxation of capital and thus reduces total investment. Indeed, most of the empirical evidence suggests that capital liberalization is positively correlated with government expenditure, social security spending and corporate taxation.
|
|
The full paper on the site in which it is published
Go to Research papers published in journals abroad
|
|
|
|
|
