Capital Mobility with Convergence in Open Economies

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1 Sasa Vol. 6 No. 7 7 Nopmb 6 Capal Mobly w Covg Op Eooms Ao Abulbasa Kaml Sool o Dsa Euao Uvs Sas Malaysa 8 USM M Pag Malaysa Tl: Fa : E-mal : ao_aml@yaoo.om ABSTRACT T majo objv o pap s o pov a oal spo o ovg olassal mols w vaous al aos o uma o pysal apal. To avo mma ovg ajusm oss g o uma apal a o pysal apal vsm a ou. T mol s alba ossly w mpally-obsv slow log-u ovg. Eooms w g al aos o uma o pysal apal a owv p o gow uly so u. Moov subsaal u-aou s may ou u o g magal pous o pysal apal a sulg g lvls o oms pysal apal vsm. Ts aalyss sms lva o Malaysa ooms w b g aos o uma o pysal apal u-aou s a lavly g avag gow as. Kywos: Capal mobly olassal mols Cobb-Douglass pouo uo soal opmum.. Iouo T ssu o ovg as v a ga al ao oom sa. T a wo majo ops o ovg ;. Covg s absolu poo ooms o gow as a ooms.. Covg s ooal ooms gow as u y a blow say sas. Eooms may ovg ooally a sll o absoluly poo ooms av lavly low say sas Bao a Sala--Ma 995. Sval mpal sus av sow a ooms ovg ooally a a lavly low a o abou % p ya. I s maabl a slow ovg as b obsv bo o op a los ooms; paula mo op ooms su as gos w ous av o b ou o ovg mu as a lss op vual ous. Fo los ooms bas olassal mol Solow 956 ps slow ovg apal sa s suly g. Ts may b als o ampl uma apal s lu mol. Howv o op ooms w p apal mobly bas olassal mol als s ps ovg sp-apal lows mmaly ualz as o u aou wol. To sval moaos o olassal mol av b vlop o avo su a uals mplao. Su moaos lu o ampl boowg sos Bao al 995 o ajusm oss o vsm. Ajusm oss alo ao pla slow ovg ulss y a subsaally lag. Bao al. 995 ou boowg sos sa; mol pysal apal a b a by boowg o wol ma was uma apal ao. T slow ovg o op -osa ooms s aou o u wll s mol; mol s vlss somwa sv gag al oos. I s pap a op-oomy mol w wo s o apal pysal a uma apal s vlop. T mol smbls a o Bao al. 995 aloug s om wo sps : Fs o smply bo s o apal a allow o b a by ogs. So ajusm oss o vsm bo s o apal a ou w assumpo a ajusm oss o uma apal vsm a g a os o pysal apal vsm. A log-laz appomao o s mol s solv aalyally. I s sow a mol a b alba o slow asympo ovg 7

2 8 Ao Abulbasa Kaml aloug may sul as al gow ooms w g aos o uma o pysal apal.. T Mol T mol s aalyss o Bao a Sala--Ma 995. T Cobb -Douglas pouo uo o augm olassal mol s os: Y F K H L AK H L w > > + < Y s GDP A s a ologal paam K s pysal apal H s uma apal a L s aw labo w gows a a osa ogous a. Tologal pogss s labo-augmg a a osa ogous a. T uaos o moo o pysal a uma apal a ; K IK K H IH H w IK a IH sa o goss vsm pysal a uma apal spvly a s pao a w s o smply assum o b sam o K a H. T oomy a boow apal o wol ma a a osa al s a. W assum a a oss ajusm oss assoa w sallao o apal a a s oss p posvly o lvl o vsm lav o lvl o sg apal. T os o sallao o a apal u s assum om K I K K w K K. a K o pysal apal; a H H. H o uma apal. L D o og b o oomy. T m voluo o D s D IK [ K IK K] I H [ H I H H] C Y D w D s u-aou m vav o D a C s oms osumpo. I [ I K] I [ I H ] C Y 3 4 s a-bala a D K K K H H H a ao payms o ogs. No a w absa om labo mobly so a ao payms o o lu wag ompos. I us ou o b ov o wo w vaabls p u o v labo: Y K H y L L L C L a D L I K L I H a L. Cosuly l us ag oao o ajusm oss.. l us w sa o K a H. T pouo uo as sv om y A T uaos o moo a.. [ ] [ ] y Sasa Vol. 6 No. Nopmb 6

3 Capal Mobly w Covg Op Eooms Sasa Vol. 6 No. Nopmb 6 9 T soal opmum s gv by mamzg sou uly o a ypal ousol subj o osas o oomy. S s p apa osumpo s m s saaous uly uo. u. T poblm s. ma u I lasy o mpoal subsuo o osumpo s osa poblm as om ma subj o 6 7 a 8 w s a o m p a s vs lasy o mpoal osumpo subsuo; a a sa vaabls was a a ool vaabls. T aual so-logam lm-s assum. T u-valu Hamloa o s poblm s ] [ ] [ ] [ w a a o sa vaabls aalogs o Lagag mulpls ag magal saow valus o ospog sa vaabls. T s-o oo o s poblm a 9 ] [ ] [ 3 4 Suy o s-o oos s su by oavy o u. a ovy o.. T sysm 6 4 a b asom o a s o 6 s-o oay al uaos o 6 p vaabls. T als oos o s bouay poblm a o 5 6 7

4 Ao Abulbasa Kaml Sasa Vol. 6 No. Nopmb 6 T asvsaly oos a yam pogammg poblms w ozos ps sou valus o sa vaabls mus ovg o zo as lm 8 lm 9 lm Euao 9 pss ualy bw magal uly o a aoal amou o osumpo a magal suly asg om a ospog m b. I uaos a saow valus o sall a usall apal a ompa. T magal saow valus o sall apal a g a os o usall apal by aos o a o pysal apal a uma apal spvly w Fom 4 a ollows a 3. 4 Fom a s possbl o pss a ms o a spvly: 5 6. a.. Subsug 5 a 6 o a 4 las o 7 8 ] [ 9

5 Capal Mobly w Covg Op Eooms [ ] 3 T bavo o a s sb by 7 3: o a b su spaaly om bavo o osumpo a b. Euaos 8 9 a mply lm lm 3 3 Fom 7 a 8 ollows a a a osa say sa all vaabls a s ovo u o gow a a osa a o ssaly zo a. T om 9 a 3 = a = mus also b osa say sa. Bo 3 a 3 mply > w osus a so o ogous paams a. Fom a ollows a lm. 33 Fom 9 a ollows a osumpo p v wo gows a a o : [ ]. 34 Cosumpo mus sasy mpoal bug osa w s gv by soug a gag uao 8: [ ] { [ ] [ ] } 35 Igao by pas a uao 33 yl: { [ ] [ ]}. Ts uao basally as a ps sou valu o osumpo uals ps sou valu o om. I s ul o solv sysm 7 3 aly o a gal om o uos. a.. To ollowg spaos a os: b b w b b.. ajusm oss a g o uma apal aumulao a o pysal apal aumulao. T poblm smpls o ollowg: 36 Sasa Vol. 6 No. Nopmb 6

6 Ao Abulbasa Kaml b b b b b b b b Say-sa valus o a sasy b 47 b 48 Say-sa valus o a a b m om say-sa magal pous: A b A b z l z Usg y a Taylo s paso aou say sa w a loglaz sysm o ou al uaos aou say sa. Ts log lazao sbs bavo o oomy loally aou say sa. T avaag o s appoa s possbly o a aalyal soluo; savaag s owv ably o psly sb bavo o ooms w a a om say sas. Fuu sa soul us ous o umal soluos o a uaos l Al l Bl C l Dl 5 5 Sasa Vol. 6 No. Nopmb 6

7 Capal Mobly w Covg Op Eooms Sasa Vol. 6 No. Nopmb 6 3 l l E 53 l l l l H G F 54 o a ma oao l l l l l l l l H G F E D C B A w A b 55 B 56 b C 57 D 58 E b 59 F 6 G 6. C H 6 T y poblm ow s o g valus o ma

8 4 Ao Abulbasa Kaml B F A C D G E H Ts g valus a soluos o aas uao w s a ouo algba uao: 4 3 H C HC EG AB ABH ECG AE BG DF. Soluos o ou-o algba uaos a b gally pss a aalyal om; vlss s pou s lavly umbsom. Supsgly 63 as a spal om w a b ompos o a pou o wo uaa uaos. Ts a b o u o popooaly bw B a D a bw F a G. Ts uaa uaos a: z z 64 z3 z4 65 w z z3 C EG AB AB EG 4ABEG z 67 ABEG z4 AB EG z. z Two g valus a posv a wo g valus a gav. T posv g valus ospo o plosv pas a mus osuly b lu o asvsaly oos o b sas. T wo gav g valus a: z z 4z 69 z3 z3 4z 4. 7 T m voluo o a s l l v v 7 v l v 73 l v v w v v v 3 s gvo ospog o g valu. Cos a oul b m om al oos o a : v A Sasa Vol. 6 No. Nopmb 6

9 Capal Mobly w Covg Op Eooms5 B C A v D v 3 v E l v l v v 78 l v l. 79 v v 3. Gow Covg a Cu Aou T m voluo o oupu p v wo y s y y l l l 8 w v a v. T gow a o y s y l y y. 8 y No a s la o oupu p v wo. T gow a o oupu p apa s o. T ovg o s l y y No a s a wg avag o a ; m{ }. I valus o a ovg sp may ag ov m. Havg ou soluos o a w a m al osumpo lvl om uao 36. Ts pou us umal gao o g-a s o 36. W s m as a uo o m a b ou by solvg 8 umally. T u-aou ao s gv by D. 83 Y y y I o o pov a llusa ampl mol s alba ollowg way: =.ya =.ya =.5ya a =.6ya Ts valus ospo o os us by Bao Rob. J. N. Ggoy Maw a Xav Sala-- Ma 995. Ep o w oos a g valu.65 sa o.5 s o mp ally ouaual; puss mol los o s ogous lm a a aou o slow ovg. Ajusm os paams a os ossly w wo mpal ums: Fs asympo ovg s suly slow.g. a a o abou %. So say-sa valu o Tob s o pysal apal s oly slgly g a. Ts oos a m o ampl =. a =-8%. Covg os a gow as p o al ao o uma a o pysal apal. L =.. I s albao =-.9% Sasa Vol. 6 No. Nopmb 6

10 6 Ao Abulbasa Kaml a m. m 84 y y A Ial lvls a sasy l l y y l m 86 l y l y l m I s s subsu o 78 a 79 a a b pss ms o y y W u o spy p paams a pss p uaou bala. T oomy s as pa as s o wol No a osumpo p v wo s osa s as w s av o sa a =.ya. T p u-aou aos a owv ualsally g s as: al u-aou amous o 5.4% o GDP m = a as v g valus o a g m. W a ol s g w oom aly wo ways. Fs mol aalyz absas om ay boowg sos. I w ou som sos u-aou oul b mu small. So ssvy o u-aou o p paams us ou o b mly g: w os o ampl 5 a =.5ya al u-aou woul b.6% o GDP a m =. Howv oomy s as pa as a asympoally aumulas all wol s asss w s laly oss w assumpo o a small oomy. Fuu sos o mol osg ozos o pauoay savgs oul la o v p paam vaaos w soul ma asympo osumpo bavo mo als. I s as al gows vy aply w m ag o ampl 3.3% o GDP m =. T oom pao o posv laosp bw u-aou a m s sagowa: I ao o uma o pysal apal s\lag magal pou o pysal apal s lag. Hg us o pysal apal u subsaal pysal apal vsm. Doms savgs a owv oo lm o a all o s vsm; o wos oomy us a u-aou. Ev lag u-aou s w a aly obsv lsw wol may b opmal lavly uma-apal abua ooms. 4. Colug Rmas Ts pap vsgas bavo o ovg op ooms u assumpo o lag ajusm oss o uma apal aumulao moa ajusm oss o pysal apal aumulao a o boowg sos. T aalyss o loglaz mol sows a mol a b alba o slow asympo ovg. Eooms w g al aos o uma o pysal apal a owv p o ovg uly ally. T mol also as a sog y owas uaou s uma-apal abua ooms. T a a ovg may b as ally s o oss w slow ovg ypally obsv oss-soal sus as log as vlopg ooms lu s sus o o b g aos o uma o pysal apal. Fom ally pla ooms oul owv b poal bg ow w a lavly wll-ua labo o. Fuu log-u poma o s ooms oul ll us mo abou ol o uma apal poss o ovg Sasa Vol. 6 No. Nopmb 6

11 Capal Mobly w Covg Op Eooms7 5. Rs [] Abl Aw. a Olv Blaa. 983 A Impoal Eulbum Mol o Savg a Ivsm. Eooma [] Bao Rob. J. a Xav Salaa--Ma. 995 Eoom Gow. M Gaw Hll. Boso MA. [3] Bao Rob. J. N Ggoy Maw. a Xav Sala--Ma. 995 Capal Mobly Nolassal Mols o Gow Ama Eoom Rvw [4] Hayas Fumo. 98 Tob s Magal a Avag : A Nolassal Ipao Eooma [5] Luas Rob E. J. 99 Wy Dos Capal Flow om R o Poo Cous? Ama Eoom Rvw: Paps a Pogs [6] Maw N. Ggoy. Dav R. a Dav N. Wl. 99 A Cobuo o Emps o Eoom Gow Qualy Joual o Eooms [7] Solow Rob. M. 956 A Cobuo o Toy o Eoom Gow Qualy Joual o Eooms Sasa Vol. 6 No. Nopmb 6

Anouncements. Conjugate Gradients. Steepest Descent. Outline. Steepest Descent. Steepest Descent

Anouncements. Conjugate Gradients. Steepest Descent. Outline. Steepest Descent. Steepest Descent oucms Couga Gas Mchal Kazha (6.657) Ifomao abou h Sma (6.757) hav b pos ol: hp://www.cs.hu.u/~msha Tch Spcs: o M o Tusay afoo. o Two paps scuss ach w. o Vos fo w s caa paps u by Thusay vg. Oul Rvw of Sps