Feldstein-Horioka Paradox Revisited

Hiroshi Fujiki and Yukinobu Kitamura ()

Monetary and Economic Studies, 1995, vol. 13, issue 1, 1-16

Abstract: A central concern in the field of international finance is always capital mobility. Feldstein and Horioka (1980) propose a simple test for international capital mobility and obtain a sign of very low capital mobility. Their interesting result is often described as the Feldstein-Horioka paradox. This paper reexamines their study using panel data analysis. Following the standard model selection procedure, preferred estimators of the elasticity of domestic investment-GDP ratio on domestic saving-GDP ratio are always significantly lower than one. In the light of our results, the Feldstein-Horioka paradox turns out to be not so robust because of cross country heterogeneities.

Keywords: Panel Data; International Capital Mobility; Feldstein-Horioka Paradox (search for similar items in EconPapers)
Date: 1995
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Working Paper: Feldstein-Horioka Paradox Revisited (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:ime:imemes:v:13:y:1995:i:1:p:1-16

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