Wednesday, May 12, 2010

Israel graduated into OECD

Israel graduated into OECD. Theirs is an interesting saga.

In 1977, they liberalised the capital account, and got themselves into a mess. This opening of the capital account was then reversed.

In the 1990s, they got back to this issue, and by this time, the `impossible trinity' was better understood. By 2003, all capital controls had been removed, alongside a shift to a floating exchange rate and inflation targeting. Capital outflows were liberalised as well, so their typical configuration involves large capital inflows alongside large capital outflows, which avoids one-way pressures on the exchange rate.

The next few `accession candidate countries' for OECD are Estonia, Russia and Slovenia. Here is the list of existing members.

3 comments:

  1. I do not see what is the advantage of being an OECD country which includes Greece which is a basket case

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  2. I guess there is a huge political angle to the whole issue that you are missing, particularly since it involves Israel and middle east.

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