Based on global data of 144 countries, this paper uses a panel data model to analyze the growth effect of capital-account opening. Furthermore, through the comparison of regressions of different income level, this paper also discusses the threshold effect and mechanism of capital-account opening. The empirical results show that, in the case of complete sample, capital-account opening has a negative effect on economic growth. However, according to the regressions of different income level, the income of 4500 dollar can be viewed as a dividing line, above which, capital-account opening does have a positive effect on economic growth. Furthermore, the results also imply that, it is through capital accumulation and deepening that capital-account opening influences economic growth.
Keywords: capital account liberalization, economy growth, threshold effect
China Finance and Economic Review
Volume 7 Number 1 Spring 2018. P95