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International Capital Mobility in the 1990s

  • Maurice Obstfeld.

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 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 three roles by studying data on correlations, international portfolio diversification, and the relations between national saving and domestic investment rates. The conclusion is that while international capital mobility has increased markedly over 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 University of California at Berkeley in its series Center for International and Development Economics Research (CIDER) Working Papers with number C94-037.

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Date of creation: 01 May 1994
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Handle: RePEc:ucb:calbcd:c94-037
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Web page: http://www.haas.berkeley.edu/groups/iber/wps/ciderwp.htm
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