Evidence of International Capital Mobility
Nov 01, 1995
Robert Krol

This paper provides evidence indicating that capital is mobile internationally. The conclusion is drawn from estimates of investment-saving equations for a panel data set of OECD countries during the 1962-1990 period. Annual data is used because a country's intertemporal budget constraint biases time-averaged data, which is used in most studies, against capital mobility. The panel data estimates control for country-size effects and business-cycle period effects.

In addition, contrary to previous research, the panel data estimates suggest that both investment and saving have a significant impact on the current account.