Capital Flight, Saving Rate and the Golden Rate Level of Capital Policy Recommendations for Latin American Countries

Abstract

This paper seeks to analyze the determinants of capital flight in selected Latin American countries throughtout the 1990s, and gives some insights into what economic policies would be adequate under capital flight conditions. Finding empirically, the saving rate to be a new determinant of capital flight, this paper discusses whether or not acheiving the golden rule level of capital would be desirable and what source of government revenue (direct or indirect taxation) would be appropriate under those conditions.