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Twin Deficits, Real Interest Rates, and International Capital Mobility

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Aspects of Globalisation

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Abstract

We argue that the causal interactions among the current account and budget balances and the real interest rate can provide more information about the effective degree of financial openness of an economy than simple saving-investment correlations. Cointegration tests reveal a variety of linkages between the variables across countries. A number of economies (Canada, Gelmany, Netherlands, and increasingly the UK) appear to be small and open, while Japan and the USA are effectively closed. The “twin deficits” and “current account targeting” hypotheses receive some support in the short run.

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Author information

Authors and Affiliations

  1. University of Macedonia, Thessaloniki, Greece

    Stilianos Fountas

  2. London Metropolitan University, London, UK

    Christopher Tsoukis

Authors
  1. Stilianos Fountas
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  2. Christopher Tsoukis
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Editor information

Editors and Affiliations

  1. London Metropolitan University, London, UK

    Christopher Tsoukis

  2. Hellenic Open University, Patra, Greece

    George M. Agiomirgianakis

  3. City University, London, UK

    George M. Agiomirgianakis

  4. Hull University, Hull, UK

    Tapan Biswas

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Fountas, S., Tsoukis, C. (2004). Twin Deficits, Real Interest Rates, and International Capital Mobility. In: Tsoukis, C., Agiomirgianakis, G.M., Biswas, T. (eds) Aspects of Globalisation. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-8881-2_5

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  • DOI: https://doi.org/10.1007/978-1-4419-8881-2_5

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-1-4613-4703-3

  • Online ISBN: 978-1-4419-8881-2

  • eBook Packages: Springer Book Archive

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