Capital Mobility And The Financial Crisis - 1918 Words

Capital mobility in the Eurozone ECO209 paper assignment Lei Lin #1000672195 Introduction: As the economy becomes more and more integrated, the trade barriers between individual countries are gradually removed. People now have more options in terms of goods, services, and of course investments, meaning capital flows are more mobile nowadays. However, deregulation of the capital raises controversy and concerns about whether if increasing capital mobility is going to bring prosperity, not only to the world economy in general, but to each country individually. According to Helleiner (1994), high capital mobility is claimed to be one of the causes to the 09 financial crisis as huge capital inflow entered into the US border and changed the housing structure and then gave rise to the easy mortgage credit and housing bubbles. However, this paper intends to find the link between the capital mobility and the financial crisis in order to see if this tragic outcome is inevitable when we have a relatively high capital mobility. The paper takes the stance that increase capital mobility is going to ultimately benefit the world economy as well as bring opportunities to countries that are ready to liberate their capital flow. The article is taking the case study approach and focuses on Europe Union before, during and after the financial crisis, as EU seems to be promising to have some convincing empirical evidence. The purpose of the paper is to show advantages of having a highShow MoreRelatedBenefits Of Developing Countries Adopting Capital Controls During A Recession1529 Words   |  7 PagesCapital control is defined as a type of measure governments can use to regulate and restrict the amount of money flowing from capital markets in order to keep inflation under control while maintaining a competitive real exchange rate. International Monetary Fund (IMF) has been slowly shifting its beliefs to where capital control policies can be deemed useful for countries during a potential crisis. Some countries, especially the developing ones that implemented capital contro l policies have experiencedRead MoreArticle Analysis: On the Contradictions of the New International Financial Architecture: Another Procrustean Bed for Emerging Markets?1404 Words   |  6 PagesSummary: what is a main concept in the case or article? 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