The Great Depression as a Watershed: International Capital Mobility over the Long Run
AbstractThis paper surveys the evolution of international capital mobility since the late nineteenth century. We begin with an overview of empirical evidence on the fall and rise of integration in the global capital market. A discussion of institutional developments focuses on the use of capital controls and the pursuit of domestic macroeconomic policy objectives in the context of changing monetary regimes. A fundamental macroeconomic policy trilemma has forced policymakers to trade off among conflicting goals. The natural implication of the trilemma is that capital mobility has prevailed and expanded under circumstances of widespread political support either for an exchange-rate subordinated monetary policy regime (e.g., the gold standard), or for a monetary regime geared mainly toward domestic objectives at the expense of exchange-rate stability (e.g., the recent float). Through its effect on popular attitudes toward both the gold standard and the legitimate scope for government macroeconomic intervention, the Great Depression emerges as the key turning point in the recent history of international capital markets.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5960.
Date of creation: May 1999
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Publication status: published as Maurice Obstfeld, Alan M. Taylor. "The Great Depression as a Watershed: International Capital Mobility over the Long Run," in Michael D. Bordo, Claudia Goldin and Eugene N. White, editors, "The Defining Moment: The Great Depression and the American Economy in the Twentieth Century" University of Chicago Press (1998)
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- Maurice Obstfeld & Alan M. Taylor, 1998. "The Great Depression as a Watershed: International Capital Mobility over the Long Run," NBER Chapters, in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 353-402 National Bureau of Economic Research, Inc.
- Obstfeld, Maurice & Taylor, Alan M, 1997. "The Great Depression as a Watershed: International Capital Mobility over the Long Run," CEPR Discussion Papers 1633, C.E.P.R. Discussion Papers.
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
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