Identification of Interest Rates and International Capital Flows
The Review of Economics and Statistics
1988
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. Copyright 1988 by MIT Press.
- DOI
- 10.2307/1928155
- Volume
- 70 (1)
- Pages
- 103
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- crossref openalex