TY  - GEN
AU  - de Aghion,Béatriz Armendariz
TI  - Long-Term Capital Reflow Under Macroeconomic Stabilization in Latin America
T2  - OECD Development Centre Working Papers,
PY  - 1991///
CY  - Paris
PB  - OECD Publishing
KW  - Development
N2  - This paper focuses on the scope for stabilizing Latin American economies to repatriate capital for the financing of long-term investments and economic recovery in the region. In particular, a simple two-period investment model is developed to show that a government seeking capital repatriation may be tempted to introduce investment subsidies on such long-term capital inflows. Typically, however, such a government will be facing the following trade off: small investment subsidies may not be sufficient to attract large-scale repatriation, and high aggregate subsidies may trigger inflationary expectations. A decreasing subsidy scheme is shown to be optimal. Such a scheme has the following properties: it provides an incentive for investors to repatriate their capital early, and at the same time, it keeps government spending low enough not to jeopardize stabilization programmes. A decreasing subsidy scheme could account for the success that the Chilean debt-equity-swap programmes have
UR  - https://s443-doi-org.br.lsproxy.net/10.1787/751522750014
ER  -