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Identification of Interest Rates and International Capital Flows

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  • Haynes, Stephen E

Abstract

The conventional paradigm that capital movements respond to differences in interest rates between countries and simultaneously reduce interest-rate differentials has been difficult to demonstrate empirically. This paper argues that such a demonstrati on may be feasible if a simultaneous model is specified that describe s the dynamics of adjustment and if a data interval is chosen that re veals the dynamics. Examination of U.S. and Canadian data from the 19 60s supports the argument-with monthly observations, that paradigm is strongly supported; with quarterly observations, capital flows and i nterest rates are not significantly related. Copyright 1988 by MIT Press.

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  • Haynes, Stephen E, 1988. "Identification of Interest Rates and International Capital Flows," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 103-111, February.
    • Handle: RePEc:tpr:restat:v:70:y:1988:i:1:p:103-11
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    Cited by:

    1. Moshirian, Fariborz & Bishop, Robert, 1997. "International business: determinants of interbank activities," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 7(4), pages 329-349, December.
    2. Alina Kudina & Oleksandr Lozovyi, 2007. "Determinants of Portfolio Flows into CIS Countries," CASE Network Studies and Analyses 0354, CASE-Center for Social and Economic Research.
    3. Ghosh, Atish R. & Qureshi, Mahvash S. & Kim, Jun Il & Zalduendo, Juan, 2014. "Surges," Journal of International Economics, Elsevier, vol. 92(2), pages 266-285.
      • Mahvash S Qureshi & Mr. Atish R. Ghosh & Mr. Juan Zalduendo & Mr. Jun I Kim, 2012. "Surges," IMF Working Papers 2012/022, International Monetary Fund.
    4. Wei Sun, 2006. "Why Do Floating Exchange Rates Float? Evidence From Capital Flows in a Structural VAR Model," EcoMod2006 272100092, EcoMod.
    5. Moshirian, Fariborz & Van der Laan, Alex, 1998. "Trade in financial services and the determinants of banks' foreign assets," Journal of Multinational Financial Management, Elsevier, vol. 8(1), pages 23-38, January.
    6. Moshirian, Fariborz, 1998. "International financial services: multinational financial companies in Australia," Journal of Multinational Financial Management, Elsevier, vol. 8(4), pages 365-379, November.
    7. S. M. Woahid Murad, 2022. "The role of domestic and foreign economic uncertainties in determining the foreign exchange rates: an extended monetary approach," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(4), pages 666-677, October.

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