Are saving and investment cointegrated? : An ARDL bounds testing approach

De Vita, Glauco and Abbott, Andrew James (2002) Are saving and investment cointegrated? : An ARDL bounds testing approach. Economics Letters, 77 (2). pp. 293-299. ISSN 0165-1765

Abstract

Using the newly developed ARDL bounds testing procedure, we find that, as implied by the intertemporal budget constraint, U.S. saving and investment rates cointegrate in all sample periods considered. Our results also show that the saving–investment correlation weakens after 1971, suggesting that the Feldstein–Horioka approach provides an at least partially informative measure of capital mobility.