The Stock Market and Capital Accumulation in an Open Economy with Flexible Exchange Rate

Merih Uctum

Working Paper from Economics Department, Queen's University

Abstract: The purpose of this paper is to analyze the interaction of financial capital movements and accumulation of physical capital in a small open economy with flexible exchange rates. Tobin's q theory of investment plays a central role in linking the financial and real sides of the economy and also in the determination of financial capital movements across boundaries. Endogenizing physical capital has important implications for the exchange rate dynamics, not captured by the models which assume a fixed capital stock.

Pages: 44 pages
Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:632

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