>The point of Feldstein-Horioka is not that capital flows are unimportant,
>but that NET capital flows are small. For example, the IMF will give
>Indonesia $40 billion. Suharto's net worth is about $40. So if he
>manages to transfer his wealth out of the country, the net flow will be
>zero.
But Suharto's is a stock, the IMF's is a flow. It has to be positive in balance of payments terms or they couldn't pay the bills. I have to think about that capital cannibalism thing, but it sounds fishy to me.
Doug