International capital mobility in developing countries: theory and evidence

The Feldstein–Horioka puzzle in Latin American and Caribbean countries: a panel cointegration analysis

“…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.…”

Capital mobility in developing countries: evidence from panel data

“…Ghosh and Ostry (1995), using this approach, concluded that in 30 of 45 countries the null hypothesis that consumption is completely smoothed out vis-à-vis shocks could not be rejected, suggesting a relatively high degree of capital mobility in developing countries. Hussein and Mello Jr (1999) also used the intertemporal consumption-smoothing model to test the degree of capital mobility in developing countries. They found evidence of very mobile capital in nine of the countries in their sample (Chile, Greece, Ireland, Israel, Malaysia, Mexico, South Africa, South Korea and Venezuela).…”

On Egypt's de facto integration in the international financial market

“…Interest rate differentials are thus used to assess the degree of cross-border capital mobility arising from the equalization of return rates on financial assets in two different countries. The argument is that, if capital is perfectly mobile, then its rate of return should be equal across countries; and hence, no interest rate differential should exist (Hussein & de Mello, 1999).…”