Measuring Capital Mobility in China: 1999 – 2005
by Huanjie Wang
Abstract
This paper examines the level of capital mobility in China during
Jan. 1999 to Apr. 2006 by estimating the covered interest rate differentials
during this time period. This study was made possible by data
from the fairly newly established offshore RMB Nondeliverable Forward
market. It concludes that China had not been enjoying perfect
capital mobility during the sample period of this study. Furthermore,
capital controls were mainly placed on capital outflow before 2003
and inflow afterward. Comparison with previous research confirms
the assertion.
Professor Stephanie Schmitt-Grohe, Faculty Advisor
JEL Codes: F32, N25, O53,
Could the Kaminsky-Reinhart Model Have Predicted the 2002 Uruguayan Currency and Banking Crises?
by Steven R. Vickers
Abstract
Because currency and banking crises cause substantial and prolonged disruptions
to an economy, economists have long sought ways to predict these events in advance.
One recent theory advanced is the “leading indicators” approach of Kaminsky (1998) and
Kaminsky and Reinhart (1999). Kaminsky (1998) presents four separate composite
indicators, and Kaminsky and Reinhart (1999) refines the model. This paper provides one
test of this theory by analyzing the currency and banking crises that arose in July 2002 in
Uruguay. This study tests the efficacy of these indicators by analyzing the behavior of
the indicators in the months directly preceding the Uruguayan crises. In general, three
indicators performed reasonably well, while one had exceptional predictive power.
Professor Stephanie Schmitt-Grohé, Faculty Advisor
JEL Codes: E47, G01, G15,
