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The Global Governance of Capital Flows: New Opportunities, Enduring Challenges

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  • Kevin Gallagher

Abstract

International capital mobility has long been associated with financial and banking crises. The Articles of Agreement of the International Monetary Fund contain multi-lateral rules to govern global capital flows. For some countries, especially those in the developing world, the IMF Articles of Agreement remain the core framework under which they have autonomy to regulate cross-border capital flows. For others, these rules have been partly superseded by more recent trade and other economic integration agreements. Thus what used to be a regime of ‘cooperative decentralization’ has become a patchwork of overlapping and inconsistent governance structures that pose significant challenges to nations attempting to regulate global capital flows for stability and growth. This paper traces the history of governing global capital flows and presents a framework for understanding three distinct eras in the modern governance of global capital. The framework emphasizes how power, interests, ideas, and institutions interact to shape each era in different combinations to yield different outcomes. From this perspective, there are many challenges ahead for effectively governing global capital flows.

Suggested Citation

  • Kevin Gallagher, 2012. "The Global Governance of Capital Flows: New Opportunities, Enduring Challenges," Working Papers wp283, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:periwp:wp283
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    Cited by:

    1. Kuzman, Tanja & Lazarevic, Jelisaveta & Nedeljkovic, Milan, 2022. "Capital flows liberalisation and macroprudential policies: The effects on credit cycles in emerging economies," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 602-619.
    2. LaGarda, Guillermo & Gallagher, Kevin & Linares, Jennifer, 2016. "Capital Openness and Income Inequality: A Cross-Country Study and The Role of CCT in Latin America," MPRA Paper 74181, University Library of Munich, Germany.
    3. Gallagher, Kevin & Lagarda, Guillermo & Linares, Jennifer, 2017. "Capital Openness and Income Inequality: Smooth Sailing or Troubled Waters?," IDB Publications (Working Papers) 8589, Inter-American Development Bank.
    4. Ilene Grabel, 2013. "The Rebranding of Capital Controls in an Era of Productive Incoherence," Working Papers wp318, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. Arana, Rumile & Ramirez, Francisco A. & Wright, Allan, 2017. "Credit Risks and Monetary Policy within Caribbean Economies," IDB Publications (Working Papers) 8268, Inter-American Development Bank.

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    More about this item

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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