Saving, Investment, Financial Integration, and the Balance of Payments

International Monetary Fund

No 1989/102, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the extent of international financial integration, and its consequences for the current account. The evidence indicates that financial liberalization in the 1970s and 1980s has resulted in a substantial movement towards closer integration of world capital markets. By reducing constraints on international capital flows, this movement makes the current account more of a residual factor in agents’ decisions.

Keywords: WP; rate of return; current account trajectory; gold standard; utility function; monetary policy; fiscal policy; current account deficit; real interest rate; debt service; current account target; reaction function; government policy; Current account; Current account balance; Current account deficits; Capital markets; Exchange rates; Global (search for similar items in EconPapers)
Pages: 40
Date: 1989-01-01
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1989/102

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