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International Capital Mobility in the 1990s

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Author Info
Maurice Obstfeld

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Abstract

This paper surveys the performance of international capital markets and the literature on measuring international capital mobility. Three main functions of a globally integrated and efficient world capital market provide focal points for the analysis. First, asset-price arbitrage ensures that people in different countries face identical prices for a given asset. Second, to the extent that the usual market failures allow, people in different countries can pool risks to their lifetime consumption profiles. Third, new saving, regardless of its country of origin, is allocated toward the world's most productive investment opportunities. The paper evaluates the international capital market's performance of these roles by studying data on international interest-rate differences, international consumption correlations, international portfolio diversification, and the relations between national saving and investment rates. The conclusion is that while international capital mobility has increased markedly in the last two decades, international capital movements remain less free than intranational movements, even among the industrial countries.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4534.

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Date of creation: Mar 1996
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Handle: RePEc:nbr:nberwo:4534

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Find related papers by JEL classification:
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

References listed on IDEAS
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  21. Obstfeld, Maurice, 1994. "Evaluating risky consumption paths: The role of intertemporal substitutability," European Economic Review, Elsevier, vol. 38(7), pages 1471-1486, August. [Downloadable!] (restricted)
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  22. French, Kenneth R. & Poterba, James M., 1990. "Japanese and U.S. cross-border common stock investments," Journal of the Japanese and International Economies, Elsevier, vol. 4(4), pages 476-493, December. [Downloadable!] (restricted)
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  25. Wong, David Y., 1990. "What do saving-investment relationships tell us about capital mobility?," Journal of International Money and Finance, Elsevier, vol. 9(1), pages 60-74, March. [Downloadable!] (restricted)
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  30. Svensson, Lars E O, 1988. "Trade in Risky Assets," American Economic Review, American Economic Association, vol. 78(3), pages 375-94, June. [Downloadable!] (restricted)
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  31. Gordon, Roger H. & Varian, Hal R., 1989. "Taxation of asset income in the presence of a world securities market," Journal of International Economics, Elsevier, vol. 26(3-4), pages 205-226, May. [Downloadable!] (restricted)
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  32. Murphy, Robert G., 1986. "Productivity shocks, non-traded goods and optimal capital accumulation," European Economic Review, Elsevier, vol. 30(5), pages 1081-1095, October. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kevin H. O'Rourke, 2002. "Europe and the causes of globalization, 1790 to 2000," CEG Working Papers 20021, Trinity College Dublin, Department of Economics. [Downloadable!]
    Other versions:
  2. Martin Feldstein, 1997. "Tax Policy and International Capital Flows," NBER Working Papers 4851, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. C. D'Adda & A. E. Scorcu, 1997. "Real Intrest Rate and Growth: An Empirical Note," Working Papers 276, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  4. Okina, Kunio & Shirakawa, Masaaki & Shiratsuka, Shigenori, 1999. "Financial Market Globalization: Present and Future," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 17(3), pages 1-40, December. [Downloadable!]
  5. Kevin H. O'Rourke & Jeffrey G. Williamson, 1999. "The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why," NBER Working Papers 7411, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Kashif Mansori, 2003. "Following in their Footsteps: Comparing Interest Parity Conditions in Central European Economies to the Euro Countries," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Michael D. Bordo & Marc Flandreau, 2001. "Core, Periphery, Exchange Rate Regimes, and Globalization," NBER Working Papers 8584, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. K. H. O'Rourke, 2001. "Globalization and Inequality: Historical Trends," Trinity Economics Papers 20019, Trinity College Dublin, Department of Economics. [Downloadable!]
    Other versions:
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