Recent Issues in International Finance: A Literature Review
The purpose of this chapter is to overview the main issues in international finance such as financial liberalisation, focusing on the process as a possible cause of financial crisis. The rest of this chapter is organised as follows. Section 2.2 provides an overview and review of literature on the sequence and order of financial liberalisation. Section 2.3 reviews capital controls, and focuses on two types of controls, namely, controls on capital outflows and inflows. Section 2.4 gives a brief discussion of factors that influence the choice of exchange rate policy, and presents an overview of both fixed and flexible exchange rates, and presents a social choice approach for choosing an appropriate exchange rate regime. Further, Sect. 2.5 first gives an overview of asymmetric information, before reviewing theories of adverse selection and moral hazard. Section 2.6 finally, summarises the chapter.
KeywordsExchange Rate Monetary Policy Moral Hazard Asymmetric Information Adverse Selection
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