International capital mobility: An alternative test based on intertemporal current account models |
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| Authors: | Chao-Hsi Huang |
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| Affiliation: | 1. International Monetary Fund, 900 19th Street NW, Washington, DC 20431, USA;2. Peterson Institute for International Economics, 1750 Massachusetts Avenue NW, Washington, DC 20036, USA;1. University of Hull, Business School, Cottingham Road, Hull HU6 7RX, UK;2. Queen Mary University of London, School of Business and Management, Mile End Road, London E1 4NS, UK;1. Department of Economics and Business, Universitat Pompeu Fabra, Ramon Trias Fargas 25-27, 08005 Barcelona, Spain;2. Department of Economics, University of Iceland, Saemundargata 2, 101 Reykjavik, Iceland;3. Birkbeck College, University of London, Malet Street, London WC1E7HX, United Kingdom;1. Department of Business Administration and Economics, Institute of Mathematical Economics, Bielefeld University, P.O. Box 100131, 33501 Bielefeld, Germany;2. Institute of Mathematical Economics, Bielefeld University, Germany |
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| Abstract: | This paper examines international capital mobility by estimating intertemporal current account models for nine major industrialized countries. To account for the large fluctuations of oil prices (the terms-of-trade) and their effects on the current account, an intertemporal current account model incorporating such effects is devised. The model estimation reveals significant terms-of-trade effects on the current account and, moreover, does not exhibit any “excess capital mobility” found in the previous literature. These results indicate that to achieve a more accurate measure of international capital mobility, a proper account of the terms-of-trade effect is essential. |
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