The 'Real' Explanation of the Feldstein-Horioka Puzzle
Nicholas Ford and
Charles Horioka ()
ISER Discussion Paper from Institute of Social and Economic Research, Osaka University
This paper shows that global capital markets cannot, by themselves, achieve net transfers of financial capital between countries and that both the integration of global financial markets as well as the integration of global goods markets are needed to achieve net transfers of capital between countries. Frictions (barriers to mobility) in one or both of these markets can impede net transfers of capital between countries, produce the Feldstein and Horioka (1980) results, and prevent real interest rates from being equalized across countries. Moreover, there is empirical evidence that barriers to the mobility of goods and services are an important obstacle to international capital mobility.
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Journal Article: The ‘real’ explanation of the Feldstein–Horioka puzzle (2017)
Working Paper: The 'Real' Explanation of the Feldstein-Horioka Puzzle (2016)
Working Paper: The "Real" Explanation of the Feldstein-Horioka Puzzle (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:0962
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