Another piece in the Feldstein-Horioka puzzle

Abbott, Andrew James and De Vita, Glauco (2003) Another piece in the Feldstein-Horioka puzzle. Scottish Journal of Political Economy, 50 (1). pp. 69-89. ISSN 0036-9292

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Using UK quarterly data, we re‐examine the nature and degree of the relationshipbetween savings and investment by means of a newly developed bounds testingprocedure to cointegration within an autoregressive distributed lag (ARDL)framework. Our finding of cointegration in all samples considered is consistent withthe view that the long‐run relationship between savings and investment is notexclusively dependent upon the level of financial integration. The evidence alsoindicates that this relationship weakens after the abolition of UK controls oncapital flows in 1979, suggesting that the Feldstein‐Horioka framework providesat least a partial measure of the degree of capital mobility.

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Journal Article
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Scottish Journal of Political Economy
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12 Feb 2020 09:35
Last Modified:
22 Nov 2022 08:44