Question: Why do large differences in interest rates continue to prevail between countries notwithstanding the increasing international mobility of capital which must tend to reduce them?

Why do large differences in interest rates continue to prevail between countries notwithstanding the increasing international mobility of capital which must tend to reduce them? (Consider, in your discussion, the contrast between, say, 10-year government bond yields in Japan and the US, 1.6 per cent versus 6.6 per cent respectively in mid-2000.)

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