International Capital Markets and the Global Real Economy

This text focuses on two aspects of the relations between the financial sector and the global real economy. First, it discusses the impact of quantitative easing programs (QE) on the situation on global capital markets. The efficiency of such programs as tools to stimulate economic growth is analyzed and compared across different countries. The author puts forward a hypothesis that the efficiency of QE depends on the capital market model in a given country and the different channels of transferring capital between the financial sector and the real economy. The second aspect of the relations between capital markets and the economy discussed in this article is the problem of market efficiency. The thesis advanced here is that capital market inefficiency not only leads to wrong asset pricing and wealth transfer between investors, but also contributes to the wrong allocation of resources and underinvestment or overinvestment in given real sectors, bringing about significant losses for the entire economy.