The Feldstein-Horioka Puzzle: A Panel Smooth Transition Regression Approach

Fouquau, Julien; Hurlin, Christophe; Rabaud, Isabelle

doi:10.2139/ssrn.2823420

Cited by 6 publications

(10 citation statements)

References 24 publications

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“…The aforementioned results may nevertheless be subject to endogeneity bias. In order to tackle this problem and evaluate the size of the bias present in the previous section, we propose an instrumental variable (IV) extension of the estimation method, similar to the one performed in Fouquau, Hurlin and Rabaud (2008). Let us recall that estimating the parameters ( λ ) of a PTR model is done with nonlinear least squares.…”

Section: Ptr Estimates and Endogeneitymentioning

confidence: 99%

Network Effects and Infrastructure Productivity in Developing Countries^*

2012

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This study proposes to investigate the threshold effects in the productivity of infrastructure investment in developing countries. It concludes to their presence in the relationship between output and private and public inputs as well as network effects in the productivity of infrastructure. When the available stock of infrastructure is low, investment has the same productivity as non‐infrastructure investment. On the contrary, when a minimum network is available, the marginal productivity of infrastructure investment is greater than the productivity of other investments. Finally, when the main network is achieved, its marginal productivity becomes similar to the productivity of other investment.

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Section: Ptr Estimates and Endogeneitymentioning

confidence: 99%

Network Effects and Infrastructure Productivity in Developing Countries^*

2012

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“…It implies that deforestation can also have an impact on real GDP, and thus real GDP should be treated as an endogenous variable to reduce biases of estimators for testing the EKC hypothesis (Lee et al 2010). To consider the potential endogeneity biases, we also apply the PSTR model with instrumental variables developed by Fouquau et al (2008). To consider the potential endogeneity biases, we also apply the PSTR model with instrumental variables developed by Fouquau et al (2008).…”

Section: Introductionmentioning

confidence: 99%

“…For the estimation procedure of the PSTR model with instrumental variables, please refer toFouquau et al (2008).…”

mentioning

confidence: 99%

Deforestation and the Environmental Kuznets Curve in Developing Countries: A Panel Smooth Transition Regression Approach

Chiu¹

2012

Canadian J Agri Economics

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Deforestation is a serious environmental problem in many developing countries. This study re-examines whether the Environmental Kuznets Curve (EKC) relationship between deforestation and real income exists for 52 developing countries during the 1972-2003 period by applying the recently developed panel smooth transition regression (PSTR) model. This paper also considers the potential endogeneity biases and other explanatory variables as a robustness check of the EKC hypothesis. The empirical results indicate the existence of a strong threshold effect between deforestation and real income, and that evidence of the EKC hypothesis for deforestation is apparent. Along with an increase in real income, deforestation increases initially, and after reaching certain income levels, deforestation drops. The turning points are US$3,021 and US$3,103, which the PSTR model endogenously determines. La déforestation constitue un problème environnemental préoccupant dans de nombreux pays en développement. Dans le présent article, nous avons tenté d'établir s'il existe ou non une relation en U inversé (courbe de Kuznets) entre la déforestation et le revenu réel, en appliquant la nouvelle méthode d'estimation d'effets de seuil avec transition lisse en panel (PSTR)à unéchantillon de 52 pays en développement au cours de la période de 1972à 2003. Nous avonségalement examiné les biais endogènes possibles et d'autres variables explicatives pour vérifier la robustesse de l'hypothèse de Kuznets. Les résultats empiriques montrent qu'il existe un effet de seuil robuste entre la déforestation et le revenu réel, et que l'évidence de l'hypothèse de Kuznets dans le cas de la déforestation est apparente. Lorsque le revenu réel augmente, la déforestation augmente aussi, mais lorsque le revenu atteint certains niveaux, la déforestation diminue. Les points de retournement sont de 3021$US et de 3103$US, ce que la méthode PSTR a déterminé de manière endogène.

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“…The PSTR methodology can solve heterogeneity and time variability problems simultaneously by introducing threshold effects in a linear panel model specification. Following González, Teräsvirta, and van Dijk () and Fouquau, Hurlin, and Rabaud (), the two‐regime PSTR model takes the form:

{ineq}_{i t} = α_{i} + β_{0} {fdi}_{i t - 1} + β_{1} {fdi}_{i t - 1} g (q_{i t - 1}; γ, c)

+ δ_{0} w_{i t - 1} + δ_{1} w_{i t - 1} g (q_{i t - 1}; γ, c) + ε_{i t}

where g ( q it − 1 ; γ , c ) is a transition function of the threshold variable q it − 1 , which is financial development, and is continuous and bounded between 0 and 1.…”

Section: Model Specification and Datamentioning

confidence: 99%

“…The possibility that the effect of FDI on inequality depends on the level of financial development clearly corresponds to the definition of a threshold regression model. We thus address this issue employing a panel smooth transition regression (PSTR) model with fixed effects introduced by González, Teräsvirta, and van Dijk () and Fouquau, Hurlin, and Rabaud (). The PSTR model is a regime‐switching model that allows a smooth transition between regimes depending on the value of the threshold (transition) variable (here, financial development).…”

Section: Introductionmentioning

confidence: 99%

Financial Development and the Fdi‐inequality Nexus

Lin

Kim

Lee

2014

Contemporary Economic Policy

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This article empirically investigates whether the link between foreign direct investment (FDI) and income inequality varieswith financial development. Using a smooth transition regression model to a panel of developing and advanced countries over the period of 1976-2005, the results indicate that financial development indeed defines the relationship between FDI and inequality. FDI raises income inequality and the effect becomes stronger in magnitude with financial sophistication. The results also indicate a large variation in the FDI effect across countries and over time, contingent on financial development. (JEL C23, F40, O15)

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The Feldstein-Horioka Puzzle: A Panel Smooth Transition Regression Approach

Cited by 6 publications

References 24 publications

Network Effects and Infrastructure Productivity in Developing Countries^*

Network Effects and Infrastructure Productivity in Developing Countries^*

Deforestation and the Environmental Kuznets Curve in Developing Countries: A Panel Smooth Transition Regression Approach

Financial Development and the Fdi‐inequality Nexus

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The Feldstein-Horioka Puzzle: A Panel Smooth Transition Regression Approach

Cited by 6 publications

References 24 publications

Network Effects and Infrastructure Productivity in Developing Countries*

Network Effects and Infrastructure Productivity in Developing Countries*

Deforestation and the Environmental Kuznets Curve in Developing Countries: A Panel Smooth Transition Regression Approach

Financial Development and the Fdi‐inequality Nexus

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Product

Resources

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Network Effects and Infrastructure Productivity in Developing Countries^*

Network Effects and Infrastructure Productivity in Developing Countries^*