(Translated by https://www.hiragana.jp/)
Financial Integration and Macroeconomic Tensions: Australian Per¬spectives
IDEAS home Printed from https://ideas.repec.org/a/ris/ecoint/0339.html
   My bibliography  Save this article

Financial Integration and Macroeconomic Tensions: Australian Per¬spectives

Author

Listed:

Abstract

The paper reviews some important macroeconomic tensions resulting from the phenomenon of financial integration. These macroeconomic tensions are illustrated using Australian perspectives. The deregulation of the Australian financial markets has increased capital mobility and profoundly changed Australia’s macroeconomic policy landscape over the past two decades. Financial deregulation has been propelled by the symbiotic processes of trade liberalisation, technological change and financial innovation. Although the measurement of the degree of capital mobility is shrouded in theoretical controversy, empirical evidence clearly reveals the trends in increased capital mobility and reduction of country risk premia, despite the rise in currency risk premia confounding the achievement of real interest parity. The phenomenon of financial integration has changed profoundly the policy targets and the mechanics underpirining the operation of policy transmission channels. Arguably, the recent emphasis of inflation targeting by reinforcing central bank independence is partly in deference to the short-term policy priorities of the international financial markets, thereby downgrading traditional policy concerns for unemployment reduction and long-term growth. The case for throwing sands on the wheels of international finance to ~~gain macroeconomic policy control appears to be counterproductive from an efficiency perspective. Nonetheless, there is a strong case for reviewing profound changes that have occurred in Australia’s financial landscapes due to financial deregulation and international integration. These changes have enhanced the exposure of the financial system to systemic risk, information asymmetry, product convergence, institutional conglomeration and anti-competitive mergers. Financial integration whilst conferring the dynamic benefits of economies of scale and scope through competition has increased the vulnerability of the financial system to risks and macroeconomic instability. Therefore, the Wallis Committee (1996) appointed by the government is opportune and will examine any market distortions inherent in current regulatory structures and recommend the establishment of an internationally best practice regulatory framework to enable the Australian traders, investors to compete efficiently in the emergent borderless financial world. A robust and efficient financial system is vital for promoting growth and macroeconomic stability.

Suggested Citation

  • Karunaratne, Neil Dias & Tisdell, Clement Allan, 1997. "Financial Integration and Macroeconomic Tensions: Australian Per¬spectives," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 50(2), pages 237-260.
    • Handle: RePEc:ris:ecoint:0339
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ecoint:0339. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Angela Procopio (email available below). General contact details of provider: https://edirc.repec.org/data/cacogit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.