Do Borders Matter? Evidence from Japanese Regional Net Capital Flows

Posted: 8 Dec 2000

See all articles by Eric van Wincoop

Eric van Wincoop

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

Yasushi Iwamoto

University of Tokyo - Faculty of Economics; Kyoto University

Abstract

Are international borders barriers to capital flows? We use evidence on net capital flows among regions within a country as a benchmark. For this purpose we develop a data set of saving and investment rates of Japanese prefectures. We find that the correlation between saving and investment rates is higher for OECD countries than for Japanese regions in both time-series and cross-sectional data. After controlling for factors that are expected to contribute to a positive correlation in the absence of barriers to capital flows, we conclude that primarily long-term capital flows are hindered by national borders, as reflected in the cross-sectional evidence.

Suggested Citation

van Wincoop, Eric and Iwamoto, Yasushi, Do Borders Matter? Evidence from Japanese Regional Net Capital Flows. Available at SSRN: https://ssrn.com/abstract=241892

Eric Van Wincoop (Contact Author)

University of Virginia - Department of Economics ( email )

Rouss Hall 114
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National Bureau of Economic Research (NBER)

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Yasushi Iwamoto

University of Tokyo - Faculty of Economics ( email )

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Tokyo 113-0033
Japan

Kyoto University

Yoshida-Honmachi
Sakyo-ku
Kyoto, 606-8501
Japan

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