While foreign direct investment and international equity flows were particularly strong in the late 1990s, international transactions in more liquid assets have risen in recent years, making up most of the increase in global capital movements. International risk-sharing and the transfer of net savings across countries are important features of this process of financial globalisation.
For example, u* (pronounced “u star”) is the natural rate of unemployment, r* (“r star”) is the neutral real rate of interest, and π* (“pi star”) is the inflation objective. According to the conventional thinking, policymakers should navigate by these stars.3 In that sense, they are very much akin to celestial stars.