The 'real' explanation of the Feldstein-Horioka puzzle

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 962

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; Current Account Adjustment; Short-term Capital Movements ; Financial Aspects of Economic Integration ; International Financial Markets
• Subject: Barriers to capital mobility ; Feldstein-Horioka paradox ; Feldstein-Horioka puzzle ; financial market integration ; goods market integration ; international capital flows ; international capital mobility ; net transfers of capital ; real interest rate equalization ; real interest rate parity ; saving-investment correlations ; trade frictions ; Kapitalmobilität ; Markteintritt ; Handelshemmnisse ; Kapitalverkehrskontrolle

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ford, Nicholas ; Horioka, Charles Yuji
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/148190
• Last update: 10.03.2025, 11:44 AM CET