“…In the literature, although there is a plethora of published studies dealing with the FH-puzzle for the developed countries, especially the OECD countries, there are not many investigations of the phenomenon for the developing countries, especially for Latin American and Caribbean countries (see, Payne and Kumazawa 2005;De Wet and Van Eyden 2005;Kim et al 2005;Murthy 2005;Sinha 2004;Ho 2002;Isaksson 2001;Rocha 2000;Hussein and Mello 1999;Montiel 1994;Haque and Montiel 1990;Dooley et al 1987;Murphy 1984). This paper, by applying a battery of recently developed first and second-generation panel unit root tests and cointegration techniques, extends the literature on the phenomenon of Feldstein-Horioka puzzle by testing whether the puzzle is valid for a heterogeneous panel of 14 Latin American and five Caribbean countries over the period, 1960-2002.…”
“…In the literature, although there is a plethora of published studies dealing with the FH-puzzle for the developed countries, especially the OECD countries, there are not many investigations of the phenomenon for the developing countries, especially for Latin American and Caribbean countries (see, Payne and Kumazawa 2005;De Wet and Van Eyden 2005;Kim et al 2005;Murthy 2005;Sinha 2004;Ho 2002;Isaksson 2001;Rocha 2000;Hussein and Mello 1999;Montiel 1994;Haque and Montiel 1990;Dooley et al 1987;Murphy 1984). This paper, by applying a battery of recently developed first and second-generation panel unit root tests and cointegration techniques, extends the literature on the phenomenon of Feldstein-Horioka puzzle by testing whether the puzzle is valid for a heterogeneous panel of 14 Latin American and five Caribbean countries over the period, 1960-2002.…”
The study aims to empirically determine whether a higher level of trade openness and the presence of better legal protection for investors enhances the impact of trade bloc membership on capital mobility based on four trading blocs: Eurasian Economic Union (EAEU), Central American and Dominican Republic Free Trade Agreement (CAFTA-DR), Central European Free Trade Agreement (CEFTA), and the Pacific Alliance. This study employs the fully modified and dynamic ordinary least squares estimators and a panel quantile regression cointegration estimator. The study finds that a country's affiliation with a trade bloc improves capital mobility in the whole group and EAEU region, low capital mobility in the Pacific Alliance region and moderate low capital mobility in the CAFTA-DR region. The legal protection system alone provided for the investors does not improve the level of capital mobility unless its interaction with investment is included. Also the study reveals that high trade openness does not necessarily lead to better capital mobility for the studied trade blocs.
It is well known that one of the important aspects of achieving sustainable development is to preserve macroeconomic stability, which is closely related to the extent of capital mobility. Given the importance of the subject for open economies, this paper examines the degree of capital mobility for African countries by using among other methodologies the Feldstein-Horioka coefficients. To determine those coefficients, we use time series data and methods, along with the Dynamic Heterogeneous panel approach. We find significant cross-country heterogeneity in the dynamic of income per capita, investment rate, and saving rate; and conclude that it is invalid to pool data across our sample countries. Furthemore, the empirical findings reveal that for African countries included in the sample, the estimated saving retention coefficients are at the same time, small and high indicating respectively higher and lower degrees of capital mobility and therefore, challenging the results of Feldstein -Horioka on developing countries.
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