Is the Feldstein-Horioka puzzle still with us? National saving-investment dynamics and international capital mobility: A panel data analysis across EU member countries

Drakos, Anastassios A.; Κουρέτας, Γεώργιος Π.; Stavroyiannis, Stavros; Zarangas, Leonidas

doi:10.1016/j.intfin.2016.11.006

Cited by 25 publications

(14 citation statements)

References 50 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Among these, notable studies dealing with the FH Puzzle using time series and cross-sectional data are Coakley and Kulasi (1997), Narayan (2005), Rocha (2006), Chen and Shen (2015), Ketenci (2012), Ma and Li (2016), Dash (2019), Ko and Funashima (2019), Zargar et al (2019), Bineau (2020), and Akkoyunlu (2020). There are more studies that employ panel data; for example, Ho (2002), Holmes (2005), Kim et al (2005), Murthy (2005Murthy ( , 2009, Payne and Kumazawa (2005), Murthy and Anoruo (2010), Narayan and Narayan (2010), Kumar and Rao (2011), Bangake and Eggoh (2012), Holmes and Otero (2014), Johnson and Lamdin (2014), Hernandez (2015), Bibi and Jalil (2016), Drakos et al (2017), Pata (2018), and Eyuboglu and Uzar (2020). Our study combines estimations for both individual and panel series data.…”

Section: Literature Surveymentioning

confidence: 99%

Capital mobility in Latin American and Caribbean countries: new evidence from dynamic common correlated effects panel data modeling

Murthy

Ketenci

2020

Financ Innov

View full text Add to dashboard Cite

This study investigates the degree of capital mobility in a panel of 16 Latin American and 4 Caribbean countries during 1960 to 2017 against the backdrop of the Feldstein-Horioka hypothesis by applying recent panel data techniques. This is the first study on capital mobility in Latin American and Caribbean countries to employ the recently developed panel data procedure of the dynamic common correlated effects modeling technique of Chudik and Pesaran (J Econ 188:393–420, 2015) and the error-correction testing of Gengenbach, Urbain, and Westerlund (Panel error correction testing with global stochastic trends, 2008, J Appl Econ 31:982–1004, 2016). These approaches address the serious panel data econometric issues of cross-section dependence, slope heterogeneity, nonstationarity, and endogeneity in a multifactor error-structure framework. The empirical findings of this study reveal a low average (mean) savings–retention coefficient for the panel as a whole and for most individual countries, as well as indicating a cointegration relationship between saving and investment ratios. The results indicate that there is a relatively high degree of capital mobility in the Latin American and Caribbean countries in the short run, while the long-run solvency condition is maintained, which is due to reduced frictions in goods and services markets causing increase competition. Increased capital mobility in these countries can promote economic growth and hasten the process of globalization by creating a conducive economic environment for FDI in these countries.

show abstract

Section: Literature Surveymentioning

confidence: 99%

Capital mobility in Latin American and Caribbean countries: new evidence from dynamic common correlated effects panel data modeling

Murthy

Ketenci

2020

Financ Innov

View full text Add to dashboard Cite

show abstract

“…Impact of Interest Rate Differential and Exchange Rate Movement on the Dynamics of Nigeria's International Private Capital Flows Karimo international borrowing or lending (Chenery & Stout, 1966;Thirlwall, 1976). The RGT has been supported by findings from Kim, Kim and Wang, (2007) for EU countries, Drakos, et al (2017) for Asian countries and Adegboye, et al (2020) for sub-Saharan Africa countries.…”

Section: Introductionmentioning

confidence: 81%

Impact of Interest Rate Differential and Exchange Rate Movement on the Dynamics of Nigeria’s International Private Capital Flows

Karimo¹

2021

CBN-JAS

View full text Add to dashboard Cite

The study examines the impact of interest rate differential and exchange rate movement on the dynamics of Nigeria’s international private capital flows from 2010Q1 to 2019Q4. It uses the interest rate parity theory and the Markov Switching Time Varying Transition Probability Modelling approach. Findings show that interest rate differential does not explain the dynamics of aggregate capital and Foreign Direct Investment (FDI) flows, but significantly explains Foreign Portfolio Investment (FPI) flows. Also, Movement in real exchange rate is significant in explaining outflows and inflows in FPI, and inflows in FDI, but neutral to aggregate capital flows. The study concludes that deviations from interest rate parity provides opportunities for interest rate and currency arbitrage in Nigeria but using aggregate capital flows mask this evidence. The study therefore recommends that the CBN should focus on exchange rate stabilization policies, so as not only to discourage FPI reversal but to also enhance FDI inflow. This can be done by putting in place foreign reserve accretion measures to boost the ability of the CBN to defend the Naira. The new policy initiative on remittances is a right step in the right direction as it could boost external reserve.

show abstract

“…The study, therefore, suggests that FH puzzle holds for a specific period of time and hinges upon the regime shifts. Drakos, Kouretas, Stavroyiannis, and Zarangas (2017) Mamingi (1997) showed that saving-investment correlations for middle-income nations tend to be smaller than those for low-income countries using fully modified ordinary least squares (FMOLS) techniques for 58 developing countries. Corbin (2001) emphasized the high estimated saving-investment coefficient might be due to the existence of specific individual country effects than to low capital mobility.…”

Section: Literature Reviewmentioning

confidence: 99%

Does the Feldstein–Horioka puzzle exist among South Asian countries? A regime‐switching approach

Patra

Mohanty

2020

Journal of Public Affairs

View full text Add to dashboard Cite

A plethora of literature has been undertaken to study the validity of the Feldstein–Horioka (FH) puzzle. However, divergent views continue to persist in the FH puzzle literature. This study explores the empirical validity of the FH puzzle in the case of South Asian countries using annual data from 1960 to 2017. Both panel data approach and Markov‐switching regression approach are used to empirically analyze the FH puzzle. The results of the cointegration test confirm the long‐run relationships between saving and investment in the selected South Asian countries. The results of Markov‐switching regression confirm that the saving‐retention coefficient has shifted from high to low values and also from low to high values. Thus, the FH puzzle exists for a particular time period and mostly depends on the regime shifts in the South Asian countries. The results of panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) methods also confirm that FH puzzle holds for the South Asian countries. Therefore, the study suggests that any saving promotion policies are desirable for enhancing investment among the South Asian regions.

show abstract

Is the Feldstein-Horioka puzzle still with us? National saving-investment dynamics and international capital mobility: A panel data analysis across EU member countries

Cited by 25 publications

References 50 publications

Capital mobility in Latin American and Caribbean countries: new evidence from dynamic common correlated effects panel data modeling

Capital mobility in Latin American and Caribbean countries: new evidence from dynamic common correlated effects panel data modeling

Impact of Interest Rate Differential and Exchange Rate Movement on the Dynamics of Nigeria’s International Private Capital Flows

Does the Feldstein–Horioka puzzle exist among South Asian countries? A regime‐switching approach

Contact Info

Product

Resources

About