International Capital Mobility and Crowding-out in the U.S. Economy: Imperfect Integration of Financial Markets or of Goods Markets?

The author examines the contention that “the U.S. economy has become so open financially as to be characterized by perfect capital mobility.” He investigates this belief by reconsidering the observation of Feldstein and Horioka that investment rates and national savings rates are highly correlated, implying low capital mobility.