This paper is concerned with the growing body of literature reporting on empirical research on international capital flows. The term “financial” capital flows (or, alternatively, “portfolio” capital flows) is used to connote capital flows other than direct investments. Readers interested primarily in research on direct investments and the multinational corporation should consult Hufbauer's paper and its references; it precedes mine in this volume.

The scope of this paper is restricted in another way as well. There have been a number of articles in recent years, primarily theoretical in nature, dealing with what might be termed macro economic models of international trade and capital flows. Some of this literature is discussed in Helliwell's paper in this volume. I have not attempted to cover this ground except insofar as it has a direct bearing on empirical research per se.

As a glance at the list of references at the end of the paper will show, most of the literature on financial capital flows is of recent vintage. Little of it pre-dates the 1960s; the major part was published within the last five or six years. This fact underlines the relatively underdeveloped state of econometric research on the capital account in the balance of payments. Econometric studies of the impacts of real activity and prices on the current account in the balance of payments have a much longer and more sophisticated history – not to mention the great volume of empirical research carried out on domestic financial markets, domestic expenditures on real goods and services, and the linkages between them.