Includes bibliographical references (p. 123-140) and index.

1. Introduction -- 2. The External Accounting Framework -- 3. Traditional Approaches to the External Accounts -- 4. Capital-theoretic Approaches to the External Accounts -- 5. Capital Mobility and the External Accounts -- 6. Policy Issues and Conclusion.

This book examines the causes, consequences and policy implications of international capital movements and nations' balance of payments accounts in the context of an increasingly integrated global economy. After providing a detailed macroeconomic accounting framework for open economies, the book critically evaluates traditional theoretical approaches to balance of payments analysis, such as the classical, elasticities, absorption, monetary and Keynesian-inspired approaches. Alternative capital-centred approaches are then outlined to highlight the real significance of capital movements and external 'imbalances' in the financially liberalised world economy.

The book sustains the argument that external 'imbalances' are not themselves problematic, as they may simply reflect increased international trade in saving, which is welfare-enhancing. This has obvious policy implications since there is a widespread, yet misunderstood, view in international financial markets and economic policy circles that external account 'imbalances' are undesirable and hence should be targeted explicitly by the authorities.

All age.