Monday , August 21 2017
Home / Econbrowser - James Hamilton / How Financially Open Is the World?

How Financially Open Is the World?

Summary:
Hiro Ito, who updates our de jure financial openness index (sometimes known as the Chinn-Ito index), has recently calculated GDP-weighted averages of the indices for country categories. The stylized facts regarding the evolution of openness changes, particularly with regard to emerging market economies. First, here are the typically reported simple average series, standardized to range between 0 and 1. Figure 1: Unweighted Average of KAOPEN for Different Country Groups. Source: Chinn and ito, and calculations by Hiro Ito. Next, here are the GDP weighted average series. Figure 2: GDP Weighted Average of KAOPEN for Different Country Groups. Source: Chinn and ito, and calculations by Hiro Ito. Notice that the time profile for the emerging market group is markedly different. Openness falls more dramatically after the debt crisis in the early 1980’s, and rises to a slightly lower level — 0.4 rather than something above 0.5. On the other hand, the runup and decline in the measure since 2008 is less noticeable. Additional discussion of previous vintages of the index here and here.

Topics:
Menzie Chinn considers the following as important:

This could be interesting, too:

Menzie Chinn writes “Challenges for Global Macroeconomic Stability and the Role of the G7”

Menzie Chinn writes The Administration Considers Raising Taxes

Menzie Chinn writes A New Puzzle à la Fama

Menzie Chinn writes Mr. Trump on Economics and Accounting

Hiro Ito, who updates our de jure financial openness index (sometimes known as the Chinn-Ito index), has recently calculated GDP-weighted averages of the indices for country categories. The stylized facts regarding the evolution of openness changes, particularly with regard to emerging market economies.

First, here are the typically reported simple average series, standardized to range between 0 and 1.

How Financially Open Is the World?

Figure 1: Unweighted Average of KAOPEN for Different Country Groups. Source: Chinn and ito, and calculations by Hiro Ito.

Next, here are the GDP weighted average series.

How Financially Open Is the World?

Figure 2: GDP Weighted Average of KAOPEN for Different Country Groups. Source: Chinn and ito, and calculations by Hiro Ito.

Notice that the time profile for the emerging market group is markedly different. Openness falls more dramatically after the debt crisis in the early 1980’s, and rises to a slightly lower level — 0.4 rather than something above 0.5. On the other hand, the runup and decline in the measure since 2008 is less noticeable.

Additional discussion of previous vintages of the index here and here.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

Leave a Reply

Your email address will not be published. Required fields are marked *