International Adjustment Under Capital Mobility

  • Michihiro Ohyama
Part of the Research Monographs in Japan-U.S. Business & Economics book series (JUSB, volume 4)


The size of international capital and exchange transactions have increased enormously in recent years as a result of financial deregulation and rapid progress in information and communication technologies. Apparently, the world has entered the era of perfect capital mobility and flexible exchange rates first envisaged by financial theorists such as Mundell (1960) and Fleming (1959) a long time ago. With the globalization of financial transactions the national rates of interest have tended to converge or at least to co-move in the same directions and exchange rates have fluctuated wildly in the short run and considerably even in the medium or long runs. The purpose of this paper is to reconsider the roles which interest rates and exchange rates (or money supplies) play in the long-run adjustment of international imbalances under perfect capital mobility.1


Exchange Rate Interest Rate Current Account Money Supply International Capital 
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© Springer Science+Business Media New York 1999

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  • Michihiro Ohyama

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