Advanced Search
MyIDEAS: Login

Increased Capital Mobility - A Challenge for National Macroeconomic Policies

Contents:

Author Info

  • Paul De Grauwe

    ()
    (K.U.Leuven, C.E.S., International Economics)

  • Magdalena Polan

    ()
    (K.U.Leuven, C.E.S., International Economics)

Registered author(s):

    Abstract

    The increased mobility of capital of the last few decades creates new challenges for the macroeconomic policies of the nation-states. In this paper we analyse some of these challenges. Contrary to what is often alleged, increased capital mobility does not necessarily increase the need for co-ordination of monetary and fiscal policies. The reason is that this increased mobility of capital has led many nations to move towards greater exchange rate flexibility. And the latter reduces the need to co-operate in the monetary field. The effect on the need for fiscal policy co-ordination crucially depends on how spillovers of fiscal policies from one country to the other are changed. To the extent that capital market integration and trade integration go together we do not know how the net spillovers of fiscal policies are affected. Increased capital mobility creates many other challenges. We analyse several of these. We argue that while increased capital mobility puts more pressure on countries to move away form pegged exchange rates towards either more flexibility or more rigidity of the exchange rates, it also increases the temptation to escape this hard choice by reimposing capital controls. We argue, however, that one particular form of capital controls, i.e. the Tobin tax, is unlikely to succeed in giving countries a “Third Way” option.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.econ.kuleuven.ac.be/ew/academic/intecon/publications/wpie012.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, International Economics in its series International Economics Working Papers Series with number wpie012.

    as in new window
    Length: 20 pages
    Date of creation: Jun 2000
    Date of revision:
    Handle: RePEc:kul:kulwps:wpie012

    Contact details of provider:
    Postal: Naamsestraat 69, 3000 Leuven
    Phone: +32-(0)16-32 67 25
    Fax: +32-(0)16-32 67 96
    Email:
    Web page: http://www.econ.kuleuven.ac.be/ew/academic/intecon
    More information through EDIRC

    Order Information:
    Email:

    Related research

    Keywords: economic integration; globalisation; capital flows; capital controls; Tobin tax;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Alan M. Taylor, 1994. "Domestic Saving and International Capital Flows Reconsidered," NBER Working Papers 4892, National Bureau of Economic Research, Inc.
    2. Matthew T. Jones & Maurice Obstfeld, 1997. "Saving, Investment, and Gold: A Reassessment of Historical Current Account Data," NBER Working Papers 6103, National Bureau of Economic Research, Inc.
    3. Alan M. Taylor, 1996. "International Capital Mobility in History: The Saving-Investment Relationship," NBER Working Papers 5743, National Bureau of Economic Research, Inc.
    4. Michael D. Bordo & Barry Eichengreen & Douglas A. Irwin, 1999. "Is Globalization Today Really Different than Globalization a Hunderd Years Ago?," NBER Working Papers 7195, National Bureau of Economic Research, Inc.
    5. Asdrubali, Pierfederico & Sorensen, Bent E & Yosha, Oved, 1996. "Channels of Interstate Risk Sharing: United States 1963-1990," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1081-1110, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. Kapitálová mobilita in Wikipedia Czech ne '')

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:kul:kulwps:wpie012. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jan Van Hove).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.