Capital market openness and output volatility

Kwang Myoung Hwang, Donghyun Park, Kwanho Shin

Research output: Contribution to journalArticlepeer-review

14 Citations (Scopus)


In this paper, using data from 21 advanced and 81 developing countries during 1971-2010, we empirically examine the impact of capital market openness on output volatility. We find that opening of capital markets increases the output volatility of developing countries. Furthermore, we find that the main channel through which capital market openness increases volatility is currency and external-debt crisis. Finally, we find that while Asian countries are less likely to experience a crisis, they become even more unstable than other developing countries once a crisis occurs. Our evidence strengthens the case for caution in developing countries' opening up of their capital markets.

Original languageEnglish
Pages (from-to)403-430
Number of pages28
JournalPacific Economic Review
Issue number3
Publication statusPublished - 2013 Aug

ASJC Scopus subject areas

  • Economics and Econometrics


Dive into the research topics of 'Capital market openness and output volatility'. Together they form a unique fingerprint.

Cite this