If Markets are Efficient, Why Have There Been So Many International Financial Market Crises Since the 1970s?

Paul Davidson

Chapter 2 in What Global Economic Crisis?, 2001, pp 12-34 from Palgrave Macmillan

Abstract: Abstract Until 1973 the post-war international payments system was, in large measure, shaped by Keynes’s thesis that flexible exchange rates and free international capital mobility are incompatible with global full employment and rapid economic growth in an era of multilateral free trade (Felix, 1997–8). This resulted in a stable international monetary system that permitted the global economy to experience unparalleled economic growth and prosperity despite widespread capital controls and international financial market regulations. Since 1973, the financial system has grown progressively more fragile with recurrent and increasingly stressful international debt and currency liquidity crises threatening the stability of the global economy.

Keywords: Exchange Rate; Financial Market; Market Maker; Flexible Exchange Rate; Capital Control (search for similar items in EconPapers)
Date: 2001
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DOI: 10.1057/9780333992746_2

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