International Financial Integration

The degree of international financial integration achieved by capital flow remains a matter of debate. Furthermore, it evolves over time as markets become more and less integrated. Policymakers want to have a precise knowledge of the extent and direction of international capital flows because such flows influence the incentives for tax evasion, international redistribution and the vulnerability of the economy to external shocks. These volumes bring together a selection of classic and contemporary readings on international financial integration. First, there is a review of the literature on measuring cross-border capital mobility followed by formal tests of the degree of international financial integration. Second there is an examination of what factors acutally determine the extent of cross-border capital mobility, and hence international financial integration.