INTERNATIONAL CAPITAL MOBILITY AMONGST THE MAJOR INDUSTRIALIZED COUNTRIES - TOO LITTLE OR TOO MUCH

This paper examines capital flows amongst the major industrialised cou ntries with a view to assessing Feldstein and Horioka's claim that int ernational capital mobility is limited. It argues that saving-investme nt correlation tests are inherently flawed, and propose an alternative methodology for testing the degree of international capital mobility. It finds that capital flows have been excessive, in the sense that th ey are driven by speculative forces rather than by economic fundamenta ls.