How internally mobile is capital?

Michael Beenstock ()
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Michael Beenstock: Hebrew University of Jerusalem

Letters in Spatial and Resource Sciences, 2017, vol. 10, issue 3, No 6, 374 pages

Abstract: Abstract If capital is perfectly mobile between regions within countries, and regional TFPs share a common stochastic trend, the ratio of regional capital–labor ratios should remain constant over time. Spatial panel data on regional capital–labor ratios in Israel are used to test this hypothesis. Since the data are nonstationary, pairwise panel cointegration tests are applied. These tests are complicated by cross-section dependence between the spatial panel units. Although the null hypothesis of perfect capital mobility is overwhelmingly rejected, rejection of long-term perfect internal capital mobility is not overwhelming.

Keywords: Internal capital mobility; Pairwise panel cointegration; Cross-section dependence (search for similar items in EconPapers)
JEL-codes: R12 R32 R53 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s12076-017-0190-1

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