Breaking: Countries Act In Their Own Interests In Spite Of What's Best For Everyone Else

from the now-that-that's-settled... dept

Cross-posted from
Dealbreaker

The prisoner’s dilemma, it seems, is still a profitable mine in economic academia.

A couple of researchers at the New York Fed are out with a new paper on capital controls. In it, conventional wisdom (and the aforementioned dilemma) proves right and the contrarian view, dating from the Asian financial crisis 15 years ago, wrong.

When countries simultaneously and independently engage in such interventions in the international flow of capital, not only global but individual welfare is adversely affected….

Countries decide to restrict the international flow of capital exactly when this flow is crucial to ensure cross-border risk sharing. Our findings point to the possibility of costly “capital control wars” and thus to significant gains from international policy coordination.

But here’s the really shocking revelation:

The paper does allow that restricting capital flows can make sense from the perspective of an individual nation. It’s just that in following this path, trouble is created for the broader global financial system.

NY Fed Paper Argues Against Capital Controls [WSJ Real Time Economics]

Other posts from Dealbreaker:



Reader Comments (rss)

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  •  
    identicon
    Zem, Feb 14th, 2013 @ 9:18pm

    Breaking News

    The Entertainment Industry Act In Their Own Interests In Spite Of What's Best For Everyone Else

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Ninja (profile), Feb 15th, 2013 @ 2:06am

    Isn't it a human trait? To think of their own welfare first while ignoring that the collective welfare actually is better overall?

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Paul Renault (profile), Feb 15th, 2013 @ 4:31am

    Link to the actual paper...

    "Capital Controls in a Small Open Economy"
    https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=CEF2012&paper_id= 396

    If you don't trust the link, (and really, you shouldn't) just google the authors' names. It should be the first hit:
    Bianca De Paoli and Anna Lipinska

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Feb 15th, 2013 @ 8:58am

    Nature vs Idealists

    Every living thing on Earth is self-interested.

    • Eco-systems are overrun by invasive (self-interested) species
    • Food chains are designed in a pyramid to ensure a large base to support more specialized (self-interested) higher life
    • Human desires are based on a self-interested hierarchy

    “Maslow’s Esteem Needs” breaks this down nicely - all VERY self-interested
    1) Thirst, Hunger
    2) Security, Protection
    3) Social needs, Love
    4) Self-esteem, Recognition
    5) Self-Actualization

    Govts are run by self-interested humans, so it always “shocks” idealists (I call them fools) when people/Govts conduct themselves in a self-interested manner.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Tex Arcana (profile), Feb 15th, 2013 @ 12:51pm

      Re: Nature vs Idealists

      Eh, he's wrong.

      Most basic human instincts (programming, drives, whatever):

      1) Procreation;
      2) Food;
      3) Clothing/shelter.

      And that's where it aaaaallllll begins...

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Feb 15th, 2013 @ 5:50pm

        Re: Re: Nature vs Idealists

        Funny how a nobody is telling everyone that a well known, established and accepted concept of Hierarchy of Needs is wrong.

        Elbows and aholes, everyone's got'em...

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Tex Arcana (profile), Feb 16th, 2013 @ 1:07pm

          Re: Re: Re: Nature vs Idealists

          Funny how an anonymous coward doesn't have the balls to identify himself, and yet calls the guy with a real name a "nobody". :tard:

          "academics" have been wrong before; and they are usually a bunch of pompous asses who will twist everything to fit their own view of the world. At least I call it like I see it, right :tard;?

           

          reply to this | link to this | view in chronology ]

  •  
    icon
    Tex Arcana (profile), Feb 15th, 2013 @ 12:53pm

    Wrong title...

    It should be "POLITICIANS Act in Their Own Interests In Spite of What's Best for Everone Else."

     

    reply to this | link to this | view in chronology ]


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