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Is capital really mobile across the border?

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  • Deergha Raj Adhikari

Abstract

The existing theories on capital mobility use either the saving-investment parity condition or the interest parity condition. The assumptions of balanced budget or purchasing power parity condition underlying these theories, however, are rarely met. This study, therefore develops a different approach called 'current account surplus saving surplus parity condition' to measure the degree of capital mobility and apply the model on US time series data. It is found that US capital is mobile internationally.

Suggested Citation

  • Deergha Raj Adhikari, 2006. "Is capital really mobile across the border?," Applied Economics Letters, Taylor & Francis Journals, vol. 13(8), pages 489-492.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:8:p:489-492
    DOI: 10.1080/13504850500400595
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    References listed on IDEAS

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    1. Gordon, Roger H & Bovenberg, A Lans, 1996. "Why Is Capital So Immobile Internationally? Possible Explanations and Implications for Capital Income Taxation," American Economic Review, American Economic Association, vol. 86(5), pages 1057-1075, December.
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    4. Stockman, Alan C & Hernandez D, Alejandro, 1988. "Exchange Controls, Capital Controls, and International Financial Markets," American Economic Review, American Economic Association, vol. 78(3), pages 362-374, June.
    5. Martin Feldstein & Philippe Bacchetta, 1991. "National Saving and International Investment," NBER Chapters, in: National Saving and Economic Performance, pages 201-226, National Bureau of Economic Research, Inc.
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