Capital flight, saving rate and the golden rule level of capital: policy recommendations for Latin America countries

Abstract

This paper seeks to analyse the determinants of capital flight in selected Latin American countries throughout 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 achieving 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