Threshold Effects of Capital Account Liberalization on Productivity: Bootstrap Method in Non-dynamic Panels

Based on panel data of 64 countries during 1984–2012, this paper applies multi-threshold model to empirically verify the threshold effects of capital account liberalization on country’s aggregate productivity. Bootstrap test result shows: capital account liberalizations of the countries at different development level have heterogeneous influences on the total factor productivity, namely, “threshold effect” exists; furthermore, financial development and per capita GDP of a country decide the direction and intensity of capital account liberalization influencing the total factor productivity to a large extent; finally, productivity growth effect of capital account liberalization has a non-monotonic relation with the financial development. As far as the developing countries at middle income-level are concerned, after their financial development has reached a certain level, finance liberalization can effectively facilitate the growth of total factor productivity.