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Why the Capital Account Matters

Published online by Cambridge University Press:  26 March 2020

Nigel Pain  and
Peter Westaway
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Extract

Most discussion of the balance of payments and its implications for exchange-rate prospects and economic policy falls into two distinct categories. Some authors focus on the current account alone while others argue that in a world of liberalised capital markets information from the volume of trade flows will simply be swamped by flows of highly mobile international capital. In this note we argue that both these viewpoints are too extreme; in aggregate both the current and capital accounts will matter.

Type
Articles
Information
National Institute Economic Review , Volume 131 , February 1990 , pp. 52 - 56
Copyright
Copyright © 1990 National Institute of Economic and Social Research

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References

Davies, G. (1989) ‘Key Aspects of the Balance of Payments Problem’, Appendix 9, ‘The 1989 Autumn Statement’, First report from the Treasury and Civil Service Select Committee, Session 1989-90Google Scholar
Niesr (1989), ‘National Institute Model 11’, December 1989Google Scholar
Oecd (1989) ‘Investment incentives and disincentives: effects on international direct investment’ (OECD Paris)Google Scholar
Pain, N. (1989), ‘International direct investment flows and the UK economy’, National Institute Discussion Paper No 158Google Scholar
Westaway, P. and Pain, N. (1989) ‘Towards a structural model of the UK exchange rate’ National Institute Discussion Paper No 165Google Scholar