Robustness of Macroeconomic Indicators of Capital Mobility

The performance of macroeconomic indicators of capital mobility is examined in the context of an intertemporal equilibrium model of a small open economy. Recursive numerical solution methods are used to compute measures of consumption smoothing, savings-investment correlation, and the variability and output-correlation of investment that characterize the model in the presence of income disturbances. None of these statistics is a reliable indicator of capital mobility unless information regarding differences in preferences, technology, and the nature of stochastic shocks can be taken into account.
Publication date: December 1992
ISBN: 9781451853391
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Transportation , capital mobility , mobility , capital markets , risk aversion , capital controls , Research Department

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