“…1 A second stream of literature relates to an improper modelling of the saving and investment relationship for the explanation of the FH puzzle, as Feldstein and Horioka (1980) use cross-sectional and time-averaged data in order to eliminate the pro-cyclical nature of savings and investment. However, the Feldstein and Horioka (1980) methodology is criticized on a number of grounds: the FH sample period was very short to capture increases in capital mobility in the second half of the 1970s; time-averaged data in crosssectional regressions overestimate or underestimate the true relationship; the nature of shocks and the structure of the economy for each country should have been taken into account; outliers, the choice of the time period, endogeneity, the regime changes, the omitted variables' bias, a constant in the regression, non-stationarity of variables in levels, and cointegration techniques; and short-run dynamics of the relationship between savings and investment should have been considered (Choudhry, Kling, & Jayasekera, 2014;De Vita & Abbott, 2002;Dooley, Frankel, & Mathieson, 1987;Ho, 2002;Jansen & Schulze, 1996;Katsimi & Zoega, 2016;Krol, 1996;Miller, 1988;Obstfeld, 1986Obstfeld, , 1995Sachs, 1981;Serletis & Gogas, 2007;Sinn, 1992). Therefore, the saving-investment relationship for individual countries with time-series analysis has been investigated to overcome the drawbacks of cross-sectional analysis such as sample selection bias, and the neglect of the country-specific saving-investment structure, structural changes, government policies, and country-specific shocks (e.g., De Vita & Abbott, 2002;Miller, 1988 for the US 2 ).…”