Imperfect Capital Mobility in an Open Economy Model of Capital Accumulation

February 1, 2004

Preview Citation

Format: Chicago

Vladimir Klyuev. Imperfect Capital Mobility in an Open Economy Model of Capital Accumulation, (USA: International Monetary Fund, 2004) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper introduces a tractable capital market friction mechanism that allows a break of the parity between domestic and external interest rates and generates a gradual evolution of capital stock and other macroeconomic variables-in contrast to the instantaneous convergence found in models with interest rate parity. The friction, derived from explicit microfoundations, is such that the cost of new loans is an increasing function of net borrowing.

Subject: Capital accumulation, Capital markets, Capital productivity, Consumption, Stocks

Keywords: Interest rate, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/031
Stock No:

WPIEA0312004
ISBN:

9781451845051
ISSN:

1018-5941

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