Rethinking the Economics of Capital Mobilityand Capital Controls

Arbeitspapier

This paper reexamines the issue of international financial capital mobility, which is today's economic orthodoxy. Discussion is often framed in terms of the impossible trinity. That framing distorts discussion by representing capital mobility as having equal significance with sovereign monetary policy and control over exchange rates. It also distorts discussion by ignoring possibilities for coordinated monetary policy and exchange rates, and for managed capital flows. The case for capital mobility rests on neo-classical economic efficiency arguments and neo-liberal political arguments. The case against capital mobility is based on Keynesian macroeconomic inefficiency arguments, neo-Walrasian market failure arguments, and neo-Marxian arguments regarding distortion of the social structure of accumulation. Close examination shows the case for capital mobility to be extremely flimsy, pointing to the ideological dimension behind today's policy orthodoxy.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IMK Working Paper ; No. 1/2009

Classification and Topics

• Classification: Wirtschaft ; International Economics: General ; Current Account Adjustment; Short-term Capital Movements ; International Monetary Arrangements and Institutions
• Subject: capital mobility ; capital controls ; impossible trinity. ; Kapitalmobilität ; Kapitalverkehrskontrolle ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Palley, Thomas I.
• Event: Veröffentlichung
• (who): Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
• (where): Düsseldorf
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/105914
• URN: urn:nbn:de:101:1-2009071348
• Last update: 10.03.2025, 11:44 AM CET