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Do high interest rates stem capital outflows?

Authors
Publisher
Elsevier B.V.
Publication Date
Volume
67
Issue
2
Identifiers
DOI: 10.1016/s0165-1765(99)00260-8
Keywords
  • Capital Flight
  • Default Risk
  • Laffer Curve
  • Interest Rates
Disciplines
  • Economics

Abstract

Abstract Conventional wisdom posits that high interest rates stem capital flight. But if higher interest rates increase the probability of debt default, they might have anti-orthodox effects. This note develops a framework for evaluating conditions under which this might occur.

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