Saving and Investment in Euroland, the EU and the enlarged EU

G. Rossini and Paolo Zanghieri ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: The Feldstein-Horioka puzzle has been recently included among the six major puzzles of international economics. It is a paradox that belongs to the large group of home biases that have become stylized facts. We investigate the F-H puzzle according to different definitions of Europe and by introducing a more suitable investment variable that results after netting out FDI. We find that the F-H coefficient decreases in all cases in which we adopt the correct investment definition. Over time we see a decrease of the F-H coefficient during the 1980 s and an increase over the 1990 s as a proof that the Maastricht Treaty discipline has made current account targeting biting. This does not happen for opting out and Eastern Europe countries.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:438

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