Benigno, Gianluca; Fornaro, Luca - C.E.P.R. Discussion Papers - 2013
This paper presents a model of financial resource curse, i.e. episodes of abundant access to foreign capital coupled … sector. A period of large capital inflows, triggered by a fall in the interest rate, is associated with a consumption boom … stagnant productivity growth. We show that capital controls can be welfare-enhancing and can be used as a second best policy …