engleski

Effects of Capital Account Liberalization on Interest Rates in Croatia

In this paper authors investigated Croatian financial market analyzing different types of interest rates in Croatia and how they were affected by the changes in the level of capital account liberalization. Using a level of foreign direct investment as a proxy measure of degree of liberalization, the authors using time series analysis tried to prove whether there is a significant relation between the two. The results show that a certain relation exists, but before making any significant conclusions, it is necessary to be cautious about a probable omitted variable bias. Hence the aim of this paper was more to show the direction and existence of this relation than to produce a concrete and exact amount of that effect, which might be misleading in this case.

capital account liberalization; measuring; econometric analysis; Croatia

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