International Capital Mobility and Asset Substitutability: Some Theory and Evidence on Recent Structural Changes
Bibliographic record
Abstract
This study examines different aspects of the international integration of capital markets. In particular, it attempts to determine whether the changes in controls and regulatory policies that have occurred in the past decade have been associated with a greater degree of market integration. The pertinent empirical literature is surveyed and some new estimates are provided. These estimates are principally for Canada, France, Germany, Japan, the United Kingdom, and the United States for the 1973-85 period as a whole and for the subperiods of the 1970s and 1980s. The issues examined are the degree of international mobility and substitutability of financial assets, the role of transactions costs in explaining deviations from covered interest parity, and the international equality (or inequality) of short-term real interest rates. The results are consistent with a high degree of mobility of financial assets in periods when capital controls are absent. Capital controls are the main identifiable barrier to mobility. Factors other than controls and regulations that have been thought to impede mobility are found not to be empirically significant. Most notably, political risk has not had significant effects in the expected direction on the differential between Euromarket and domestic interest rates, and transactions costs are too small to account for sizable deviations from covered interest parity. Tests of a portfolio-balance model of the exchange risk premium give results that are also consistent with a high degree of substitutability for financial assets. But despite the high degree of capital mobility and substitutability, short-term real interest rates are not equalized internationally. The empirical evidence indicates that, although removal of controls in various countries over the past ten years has stimulated mobility, there is no evidence that substitutability has tended to increase during the 1980s, nor have real interest rates generally moved towards international equality.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.001 | 0.005 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.003 | 0.005 |
| Science and technology studies | 0.000 | 0.003 |
| Scholarly communication | 0.002 | 0.004 |
| Open science | 0.001 | 0.001 |
| Research integrity | 0.001 | 0.001 |
| Insufficient payload (model declined to judge) | 0.006 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".