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Empirical evidence on international capital immobility: a consumption-based approach

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  • Sulaiman Al-Jassar
  • Imad A. Moosa

Abstract

Based on consumption patterns and consumption-income correlation, a measure of capital mobility is proposed and used to demonstrate that capital mobility is low and that it is lower for low-income than high-income countries. While this result can be dismissed as being based on an unreliable measure of capital mobility or accepted as constituting a puzzle, it can be rationalised intuitively. While capital mobility provides benefits, it can be detrimental to the recipient country, which encourages the imposition of capital controls. Capital mobility can be impeded by home bias and failure of the benefits of international diversification to materialise.

Suggested Citation

  • Sulaiman Al-Jassar & Imad A. Moosa, 2020. "Empirical evidence on international capital immobility: a consumption-based approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 34(2), pages 175-192, March.
    • Handle: RePEc:taf:irapec:v:34:y:2020:i:2:p:175-192
    DOI: 10.1080/02692171.2019.1707788
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    Cited by:

    1. Vasudeva N. R. Murthy & Natalya Ketenci, 2020. "Capital mobility in Latin American and Caribbean countries: new evidence from dynamic common correlated effects panel data modeling," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-17, December.

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