This paper focuses on two countries, Japan and the United States, to test the integration of capital markets. In Japan, the enactment of the Foreign Exchange and Foreign Trade Control Law in December of 1980 amounted to a true regime switch that virtually eliminated capital controls. Using...

This paper reviews the literature on fiscal policy and the exchange rate--focusing on an expansionary fiscal policy that does not affect market expectations about the future course of monetary policy. It is shown that a few key elements determine the sign and magnitude of the relationship...

This paper studies the role of domestic and foreign savings in financing capital formation in 19 industrial countries during the years after World War II. The authors' interpretation of the statistical evidence is that there is very little support for the view that, over the medium term, goods...