A Time Series Approach to the Feldstein-Horioka Puzzle with Panel Data from the OECD Countries

Saten Kumar () and B. Bhaskara Rao ()

MPRA Paper from University Library of Munich, Germany

Abstract: The Pedroni method is used to estimate the Feldstein-Horioka equation from 1960-2007 with a panel of 13 OECD countries. It is found that the Feldstein-Horioka puzzle exists in a weaker form with a much reduced saving retention coefficient. The Bretton Woods agreement in particular has weakened the Feldstein-Horioka puzzle by significantly improving the international capital mobility. In comparison the Maastricht agreement seems to have improved capital mobility only by a small magnitude. The structural break tests of Westerlund are used in this paper.

Keywords: Feldstein-Horioka puzzle; Structural breaks; Bretton Woods and Maastricht agreements; International capital mobility (search for similar items in EconPapers)
JEL-codes: C23 F21 F36 (search for similar items in EconPapers)
Date: 2009-11-08
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Related works:
Journal Article: A Time‐series Approach to the Feldstein–Horioka Puzzle with Panel Data from the OECD Countries (2011)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:18464

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