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Chart of the world's gross domestic product over the last two millennia. The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic action that together facilitate international flows of financial capital for purposes of investment and trade financing.
In macroeconomics and international finance, the capital account, also known as the capital and financial account, records the net flow of investment into an economy. It is one of the two primary components of the balance of payments , the other being the current account .
Option (b): An independent monetary policy and free capital flows (but not a stable exchange rate). Option (c): A stable exchange rate and independent monetary policy (but no free capital flows, which would require the use of capital controls). Currently, Eurozone members have chosen the first option (a) after the introduction of the euro.
International finance studies the flow of capital across international financial markets, and the effects of these movements on exchange rates. [ 3 ] International monetary economics and international macroeconomics study flows of money across countries and the resulting effects on their economies as a whole.
In international economics, international factor movements are movements of labor, capital, and other factors of production between countries. International factor movements occur in three ways: immigration / emigration , capital transfers through international borrowing and lending, and foreign direct investment . [ 1 ]
Country foreign exchange reserves minus external debt. In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a quarter or a year) and the outflow of money to the rest of the world.
The Feldstein–Horioka puzzle is a widely discussed problem in macroeconomics and international finance, which was first documented by Martin Feldstein and Charles Horioka in a 1980 paper. [1] Economic theory assumes that if investors can easily invest anywhere in the world, acting rationally they would invest in countries offering the highest ...
Net capital outflow (NCO) is the net flow of funds being invested abroad by a country during a certain period of time (usually a year). A positive NCO means that the country invests outside more than the world invests in it.