Robert McCauley maps the capital flows that preceded the 2008 crisis and argues that it was European banks that fuelled the U.S. housing boom. Large official inflows into U.S. Treasury and agency notes should have reinforced a U.S. mortgage market dominated by fixed-rate mortgages. Instead, one...

The paper argues that China's capital controls remain substantially binding. This has allowed the Chinese authorities to retain some degree of short-term monetary autonomy, despite the fixed exchange rate up to July 2005. Although the Chinese capital controls have not been watertight, we find...