TY  - JOUR
AU  - Obstfeld,Maurice
TI  - The Global Capital Market: Benefactor or Menace?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6559
PY  - 1998
Y2  - May 1998
UR  - http://www.nber.org/papers/w6559
L1  - http://www.nber.org/papers/w6559.pdf
N1  - Author contact info:
Maurice Obstfeld
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-9646
Fax: 510/642-6615
E-Mail: obstfeld@econ.berkeley.edu
AB  - This paper reviews the theoretical functions, history, and policy problems raised by the international capital market.  The goal is to offer a perspective on both the considerable advantages the market offers and on the genuine hazards it poses, as well as on the avenues through which it constrains national policy choices.  A duality of benefits and risks is inescapable in the real world of asymmetric information and imperfect contract enforcement.  I argue, however, that in confronting the global capital market there is no reason to depart from conventional economic wisdom.  The way to maximize net benefits is to encourage economic integration while attacking concomitant distortions and other unwanted side-effects at, or close to, their sources.
ER  -