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Slides Chapter8 Capital Mobility

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  International Macroeconomics, Chapter 8   Schmitt-Groh´e, Uribe, Woodford Slides for Chapter 8International Capital Market Integration International Macroeconomics  Schmitt-Groh´e Uribe Woodford Columbia UniversityApril 1, 2018 1  International Macroeconomics, Chapter 8   Schmitt-Groh´e, Uribe, Woodford Measuring Capital Mobility I:Observed Savings-Investment Correlations Idea:  In a closed economy  S   =  I  , which implies that the correlationbetween  S   and  I   is 1. In an open economy, this need not be thecase. Thus, if we observe low saving-investment correlations acrosscountries, then we can conclude that countries are not closed, thatis. that there is international capital market integration.But suppose we find a near perfect correlation between  S   and  I  .Does this necessarily mean that there is no capital mobility? 2  International Macroeconomics, Chapter 8   Schmitt-Groh´e, Uribe, Woodford Observed Savings-Investment Correlations 1. Across countries(a) The Feldstein Horioka Regression: 1960-1974(b) Updates of the Feldstein Horioka Regression: 1960 - 20032. Over time within the same country: United States, 1928-2015. 3  International Macroeconomics, Chapter 8   Schmitt-Groh´e, Uribe, Woodford Saving and Investment Rates for 16 Industrial Countries (1960-1974 Averages) 0.150.20.250.30.350.40.150.20.250.30.350.4  AUS CAN DEN FIN GER GRE IRE ITA JAP NET NEW SWE U.K USA BEL AUSTRIA S/GDP    I   /   G   D   P 0.035 + 0.887 (S/GDP) → Source: M. Feldstein and C. Horioka, “Domestic Saving and International Capital Flows,”  Economic Journal   90, June 1980, 314-29.4

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Oct 8, 2019
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