International Capital Mobility and External Account Determination
Publisher: Palgrave Macmillan
Published: December 1994
Language: eng
Format: Hardcover
Number of pages: 147
ISBN-13: 9780312121006
Subjects: International Finance; Balance of payments; Balance of trade; Investments, Foreign; Business/Economics
Description: This book examines the causes, consequences and policy implications of international capital movements and nations' balance of payments accounts in the context of an increasingly integrated global economy.

After providing a detailed macroeconomic accounting framework for open economies, the book critically evaluates traditional theoretical approaches to balance of payments analysis, such as the classical, elasticities, absorption, monetary and Keynesian-inspired approaches. Alternative capital-centred approaches are then outlined to highlight the real significance of capital movements and external 'imbalances' in the financially liberalised world economy.

The book sustains the argument that external 'imbalances' are not themselves problematic, as they may simply reflect increased international trade in saving, which is welfare-enhancing. This has obvious policy implications since there is a widespread, yet misunderstood, view in international financial markets and economic policy circles that external account 'imbalances' are undesirable and hence should be targeted explicitly by the authorities.