Panel data model comparison for empirical saving-investment relations

Helmut Herwartz and Fang Xu

No 2006-06, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

Abstract: The low capital mobility among OECD countries, signalled by a high saving-investment (SI) relation and known as the Feldstein-Horioka puzzle, has triggered a lively discussion in the empirical literature. In this paper, we compare between, pooled, time and country dependent specifications of the SI relation via cross-validation criteria. It is found that the country dependent model is best performing among the four. Secondly, error correction models are uniformly outperformed by static panel models. Thirdly, via scatter diagrams of cross section specific estimates we observe a different time evolution of SI relations for developed and developing economies.

Keywords: Saving-investment relation; Feldstein-Horioka puzzle; model comparison (search for similar items in EconPapers)
JEL-codes: C33 E21 E22 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Panel data model comparison for empirical saving-investment relations (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:4350

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