The Review of Economics and Statistics Vol. 70 No. 1 1988
Identification of Interest Rates and International Capital Flows
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.
- DOI
- 10.2307/1928155
- Volume
- 70
- Issue
- 1
- Pages
- 103
- Sources
- crossref openalex