When Capital Markets Fail

October 2, 2001

Jeffrey Sachs*)

 

Acentral argument for capitalism is that capital markets efficiently channel savings to the most profitable investments. Similarly, one argument for global capitalism is that global capital markets efficiently allocate savings from anywhere in the world to investments anywhere in the world. Yet the performance of global financial markets has been unimpressive in recent years, displaying booms, busts, and unrealistic p

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