## Robustness of Macroeconomic Indicators of Capital Mobility

_IMF Working Papers, December 1, 1992_

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## Bibliographic details
- Authors: Enrique G. Mendoza
- Published: December 1, 1992
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451853391.001

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### Summary
- Author: Enrique G. Mendoza
- Date: December 1, 1992
- Core question: How well do common macroeconomic indicators identify capital mobility within an intertemporal equilibrium model of a small open economy?

### Methodology
- Model framework: Intertemporal equilibrium model of a small open economy.
- Solution approach: Recursive numerical solution methods.
- Indicators computed:
  - Measures of consumption smoothing.
  - Savings–investment correlation.
  - Variability of investment.
  - Output-correlation of investment.
- Environment: Model characterized in the presence of income disturbances.

### Key findings
- None of the computed statistics is a reliable indicator of capital mobility on its own.
- The reliability of these indicators depends critically on information regarding:
  - Differences in preferences.
  - Differences in technology.
  - The nature of stochastic shocks.

### Implications
- Empirical assessment of capital mobility requires accounting for cross-country or cross-context heterogeneity in preferences and technology, and careful modeling of shock processes.
- Policy or inference based solely on consumption smoothing, savings–investment correlation, or investment variability/output-correlation may be misleading without additional structural information.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/robustness-of-macroeconomic-indicators-of-capital-mobility-861_