Capital flight and war
By: Victor A.B. Davies
Contributors: World Bank. Development Research Group
Series: Policy research working paper -- 4210; Policy research working papers -- 4210.
Publisher: World Bank, Development Research Group, Growth and Macroeconomics Team
Published: 2007
Place of publication: Washington, D.C
Language: eng
Number of pages: 38
Subjects: Capital movements; Inflation (Finance)
Description: This paper provides empirical evidence on the effects of inflation on post-war capital flight flows. I test the hypothesis that inflation has a positive additional impact on capital flight flows after war. I use a new panel dataset of 77 developing countries, of which 35 experienced at least one episode of war between 1971 and 2000. I use a range of estimation methods and four capital flight measures -- Cline, World Bank Residual, Morgan Guarantee, and Dooley. The results consistently support the research hypothesis: Post-war inflation increase annual capital flight flows by about 0.005 to 0.01 percentage points of GDP. This effect is substantial in total at high inflation rates. The implication is that low inflation helps to curb capital flight in post-conflict economies.
Notes: "April 2007"

Includes bibliographical references (p. 20-22).

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