Comparing Capital Mobility Across Provincial and National Borders
18 Pages Posted: 25 Jul 2000 Last revised: 10 Oct 2010
Date Written: June 1998
The persistence of high savings-investment correlations and home-country bias in portfolio construction at the national level is contrasted with new evidence of savings behaviour in Canadian provinces. We confirm that national borders clearly divert flows of capital to domestic investments, but provincial borders have no such effect. In particular, while there is a significant correlation between national savings and investment, among provinces that effect disappears. We discuss the implications for interpreting the distinction between provincial and national borders.
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