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From Worldwide Capital Mobility to International Financial Integration: A Review Essay

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  • George Furstenberg

Abstract

To be useful to economists, the definition of worldwide financial integration must refer to its welfare-relevant functions or consequences. What ultimately matters is its contribution to the equalization of current and intertemporal trading opportunities, represented by the cost of financial services, at maximum efficiency levels. Analyzing imperfect financial integration implies identifying the obstacles that prevent such equalization, with a lack of perfect capital mobility being only one of the possible impediments. Focusing on how to achieve international equalization, at least cost, of a broad range of financial services is a necessary change for a literature that has tended to rely on single stock, flow, or price correlations to gauge the degree of financial integration, without viewing it as a continuing microeconomic task with many facets. Copyright Kluwer Academic Publishers 1998

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  • George Furstenberg, 1998. "From Worldwide Capital Mobility to International Financial Integration: A Review Essay," Open Economies Review, Springer, vol. 9(1), pages 53-84, January.
    • Handle: RePEc:kap:openec:v:9:y:1998:i:1:p:53-84
    DOI: 10.1023/A:1008227306994
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