March 24, 2023

The Chinn-Ito Financial Openness Index Updated to 2020

Source: Erten, Korinek, Ocampo (JEL, 2021).
However, on a specific country-year basis, the correlation of changes in the KAOPEN index and changes in other indices varies from 0.01 to 0.29 (the latter considerably different from absolutely no).
Ito and I do not declare there arent much better indicators. The one produced by Fernández, Klein, Rebucci, Schindler and Uribe (2016) is based on the IMFs more detailed inventory of de jure restrictions, both on incoming and outgoing flows, and probably much better captures the impact of controls. The protection of this index is limited to 1995 onward, restricting the period of information that can be analyzed statistically.
The map above programs a photo of financial openness. What does our index say about the advancement of financial openness over the previous decade (2010 to 2020)? Here is a map of the change in our index.

Keep in mind that there has been substantial stability in the determined degree of monetary openness; in the map above, most nations experience a 0 modification in ka_open (e.g., China)

Heres a map of monetary openness in 2020 (normalized index, 1 to 0). The darker, the more open.

We initially constructed the index twenty years back (Chinn and Ito, NBER WP No. 8967)! See the website for the data.


The description of the current dataset is Ito and Chinn (2022 ).
Hiro Ito and I built the index due to the fact that there was couple of single, widely offered and consistently updated steps of financial openness at the time, with the exception of Quinns (APSR, 1997) step, which at the time was more limited in coverage. Specific dummy variables based upon the IMFs (old) de jure classification of controls (on exchange rates, export profits, capital account, current account) didnt show helpful in one of my early empirical analyses of monetary advancement (Chinn, 2004, ungated variation here). The Chinn-Ito index, based on the previously mentioned IMF de jure classifications, was transformed into a single index using by taking the first principal part (basically– the capital account element is smoothed), and was developed for a job to assess how monetary openness correlates with monetary development, published in JDE ( 2006 ) ( with lots of aid from friends, including Ashok Mody, Antu Panini Murshid).
Quinn, Schindler and Toyoda (IMF Econ Rev 2011) offer an early contrast of measures. More current comparisons are in Graebner et al. (2021) and Erten et al. (2021 ). In the aggregate, the procedures move together.

The protection of this index is restricted to 1995 onward, limiting the period of data that can be evaluated statistically.
The map above shows a snapshot of financial openness. Here is a map of the modification in our index.

Leave a Reply

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