Commentary: The Integration of World Capital Markets

It is important to consider therefore the economic effects of these links among national capital markets, including the effects on investment, growth, monetary policy, and exchange rates. In their paper for this conference, Michael Mussa and Morris Goldstein have combined a wide-ranging summary of the existing research on the integration of world capital markets with their own carefully considered judgments on these issues. Since I found their judgments to be sound and carefully considered, I will not discuss their specific remarks, but will comment instead on a few of the issues raised by their paper and, more generally, by the subject of capital market integration: the international mobility of savings, the European exchange rate mechanism (ERM), and the impact of capital mobility on the effectiveness of domestic monetary policy.