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Imperfect Capital Mobility in an Open Economy Model of Capital Accumulation

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  • Mr. Vladimir Klyuev

Abstract

This paper introduces a tractable capital market friction mechanism that allows a break of the parity between domestic and external interest rates and generates a gradual evolution of capital stock and other macroeconomic variables-in contrast to the instantaneous convergence found in models with interest rate parity. The friction, derived from explicit microfoundations, is such that the cost of new loans is an increasing function of net borrowing.

Suggested Citation

  • Mr. Vladimir Klyuev, 2004. "Imperfect Capital Mobility in an Open Economy Model of Capital Accumulation," IMF Working Papers 2004/031, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2004/031
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    References listed on IDEAS

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    7. Mr. Leslie Lipschitz & Mr. Alex Mourmouras & Mr. Timothy D. Lane, 2002. "Capital Flows to Transition Economies: Master or Servant?," IMF Working Papers 2002/011, International Monetary Fund.
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    9. Neary, J Peter & Purvis, Douglas D, 1982. " Sectoral Shocks in a Dependent Economy: Long-run Adjustment and Short-run Accommodation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 84(2), pages 229-253.
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