Robustness of Macroeconomic Indicators of Capital Mobility
December 1, 1992
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Summary
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.
Subject: Business cycles, Consumption, Economic growth, External position, Foreign assets, International trade, Labor, National accounts, Trade balance
Keywords: balance of trade, Business cycles, capital mobility, Consumption, consumption variability, foreign assets, Foreign assets, immobile capital, investment variability, open economy, savings plan, savings-investment correlation, standard deviation, Trade balance, WP
Pages:
40
Volume:
1992
DOI:
Issue:
111
Series:
Working Paper No. 1992/111
Stock No:
WPIEA1111992
ISBN:
9781451853391
ISSN:
1018-5941
