Cover IMF Working Papers
Imperfect Capital Mobility in an Open Economy Model of Capital Accumulation
Author:
Mr. Vladimir Klyuev
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Series:
IMF Working Papers
Volume/Issue:
Volume 2004: Issue 031
Language:
English
Publication Date:
01 Feb 2004
DOI:
https://doi.org/10.5089/9781451845051.001
ISBN:
9781451845051
ISSN:
1018-5941
Pages:
19
Keywords:
WP; interest rate
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2004: Issue 031