International capital movements, speculation, and the 'conservation of saving' principle. A 'Harcourtian' interpretation of global imbalances and the global crisis
AbstractThis paper is inspired by the contributions made by Geoff Harcourt concerning the macroeconomics of open economies, international capital movements and speculation (e.g. Harcourt 1994, Dalziel/Harcourt 1997). This conceptual frame- work is developed in a simple model, useful for validating some of Harcourtâ€™s policy proposals for open economies, as well as for interpreting global imbalances and the global crisis. More specifically, this paper describes the workings of two economies, Home and the Rest of the World (RoW), which are related through both trade and capital flows. On this basis, this article: (i) develops the relationship between income levels in a deficit country (Home) and in a partner country (RoW); (ii) studies the role of key parameters in the two countriesâ€™ main macroeconomic functions; (iii) applies the main results to global imbalances and in particular to the US, which plays the role of Home in the present context; (v) suggests a possible link between global imbalances, speculation, and the international role of the dollar; (vi) proposes an enlarged version of Harcourtâ€™s 'modest proposal for taming speculators'.
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Bibliographic InfoArticle provided by Edward Elgar in its journal Intervention. European Journal of Economics and Economic Policies.
Volume (Year): 8 (2011)
Issue (Month): 1 ()
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Web page: http://www.elgaronline.com/ejeep
global imbalances; capital movements; speculation; international monetary system;
Find related papers by JEL classification:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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