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With perfect capital mobility, the domestic real interest rate must be the same as the world...

With perfect capital mobility, the domestic real interest rate must be the same as the world real interest rate.

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Yes, with perfect capital mobility, the domestic real interest rate must be same as the world real interest rate.

Consider a situation where the local interest rate is higher than the local interest rates, due to perfect capital mobility investors in the other nations to earn more return on their funds will move their capital to the home country. This will continue to the point where the inflow of cash will reduce the interest rates in the home country and make it similar to the world rates and vice versa.

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