Working Paper: NBER ID: w8927
Authors: Alan M. Taylor
Abstract: Recent globalization trends have refocused attention on the historical evolution of international capital mobility over the long run. The issue is examined here using time-series analysis of current-account dynamics for fifteen countries since circa 1850. The inter-war period emerges as an era of low capital mobility and only recently can we observe a tentative return to the degree of capital mobility witnessed during the late nineteenth century. The analysis of saving and investment dynamics also helps make sense of the frequently observed high correlation of saving and investment rates in historical data.
Keywords: No keywords provided
JEL Codes: F2; F21; F33; F36; F41; N10; N20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| current account to GDP ratio (c ay) is stationary (F32) | investment and saving are cointegrated (E22) |
| high correlation of saving and investment rates observed historically (E20) | natural outcome of the LRBC condition (Y80) |
| interwar period characterized by low capital mobility (F32) | recent trends indicate a tentative return to levels of capital mobility seen in the late nineteenth century (F20) |
| fluctuations in saving and investment (E22) | understood through the lens of the LRBC (K20) |