Robustness of Macroeconomic Indicators of Capital Mobility

Enrique Mendoza

No 1992/111, IMF Working Papers from International Monetary Fund

Abstract: The performance of macroeconomic indicators of capital mobility is examined in the context of an intertemporal equilibrium model of a small open economy. Recursive numerical solution methods are used to compute measures of consumption smoothing, savings-investment correlation, and the variability and output-correlation of investment that characterize the model in the presence of income disturbances. None of these statistics is a reliable indicator of capital mobility unless information regarding differences in preferences, technology, and the nature of stochastic shocks can be taken into account.

Keywords: WP; capital mobility; standard deviation; open economy; balance of trade; savings-investment correlation; immobile capital; savings plan; consumption variability; foreign assets; investment variability; Consumption; Business cycles; Foreign assets; Trade balance (search for similar items in EconPapers)
Pages: 40
Date: 1992-12-01
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Citations: View citations in EconPapers (19)

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