Abstract Based on China's medium-and long-term capital account data from 1994 to 2018, this paper constructs an endogenous growth model under open conditions and studies the effects of capital account liberalization on economic growth.The empirical results show that capital account liberalization can promote economic growth under certain conditions, but at the same time it also rises the risk of excessive foreign borrowing. For post-industrial countries, due to the decline of capital output elasticity, the debt risk of excessive foreign borrowing caused by capital account liberalization is also reduced. However, for countries with an aging population, in the case of a decline in the savings rate, capital account liberalization is conducive to maintain a high economic growth rate. The significance of this study is that it demonstrates the rationality of the timing for China to promote the reform of capital account opening up. It is suggested that we should promote the reform of exchange rate marketization and RMB internationalization comprehensively, adhere to two-way opening of the capital market, and let China share the fruits of the free flow of capital elements with the world.
2021, Vol. 38 
