Post-liberalization return volatility declines, capital flow vol increase, consupmtion vol decrease, and currency vol decrease. Do I have this right? I one I am worried about is capital flow vol as schweser seems to say in one sentence that it increases and the next it decreases. Anything else?
I think Volatility initially increases with the inflow of capital, but then levels out and declines.
I thought consumption patterns stay roughly the same and are unaffected by Liberalization. Could be wrong though. I would suggest you know how to break down the effects into FINANCIAL and ECONOMIC. Financial: - Stock Market Performance - Capital Flows - Currencies ??? what else am I missing Economic: - GDP - Cost of Capital - Other Macro Economic Factors
Firm efficiency increases due to tighter corp gov. from foreign investors