Article history: Received 12 September 2008 Received in revised form 14 July 2009 Accepted 15 August 2009 Available online 4 September 2009 This paper examines international capital mobility by estimating intertemporal current account models for nine major industrialized countries. To account for the large fluctuations of oil prices (the terms-of-trade) and their effects on the current account,...

Three post-1980 developments have instilled in many observers a feeling that all is not quite right with the world financial system: the international debt problem of many developing countries, the large U.S. current account deficit and the corresponding cumulation of foreign indebtedness, and the heightened volatility of exchange rates and other asset prices in world financial markets. To what...

The classical Heckscher-Ohlin-Mundell paradigm states that trade and capital mobility are substitutes, in the sense that trade integration reduces the incentives for capital to ‡ow to capital-scarce countries. In this paper we show that in a world with heterogeneous …nancial development, the classic conclusion does not hold. In particular, in less …nancially developed economies (South), trade a...