Will History Rhyme? The Past as Financial Future
William N. Goetzmann
Yale School of Management - International Center for Finance; National Bureau of Economic Research (NBER)
July 26, 2004
Yale ICF Working Paper No. 04-19
History demonstrates that global capital markets can contract as well as expand. A long-term view of finance suggests that we should prepare for periodic segmentation as well as integration of markets in the 21st Century. Anti-capitalist ideologies have historically been the vectors of attack on the cross-border flow of capital, however the fundamental cause may actually be domestic hostility towards foreign ownership and control. The roots of the conflict between domestic interests and foreign investors may be inherent in global equilibrium models. In a frictionless capital market, foreigners will always own a greater proportion of a small economy's assets. By the same token, domestic investors in small economies will always seek to export most of their capital. This equilibrium is at odds with a stable condition of national ownership and control of assets.
Number of Pages in PDF File: 23
Keywords: Imperialism, International Finance, Diversification
JEL Classification: N23, N24, F3
Date posted: June 29, 2004
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