Within an economy, financial markets exist in order to bring together savings-deficit and savings-surplus units. The international capital markets perform the same function between economies and can be thought of as extending the benefits provided by such markets on a national scale. At least in principle unrestricted capital flows promise advantages to the world economy comparable to those obtained as a result of free trade. However, the simultaneous proliferation of exchange controls and easing of barriers to trade suggests that this may not be so.
KeywordsIncome Marketing Expense Hedging
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- 1.B. J. Moore, An Introduction to the Theory of Finance (New York: The Free Press, 1968) p. 95.Google Scholar