The Feldstein–Horioka Puzzle and Twin Deficits in Selected Countries

Jarko Fidrmuc

Economic Change and Restructuring, 2003, vol. 36, issue 2, 135-152

Abstract: Hysteresis (unit root) of the current account, fiscal balance, and investment shares is found for the majority of industrial countries as well as selected emerging and transition economies between 1970 and 2001. Twin deficits are defined as a positive long-run relationship between the current account and the fiscal balance. The paper provides evidence for twin deficits in several countries, although we can see differences between the 1980s and the 1990s. Investment in some EU countries is financed to a relatively high degree at the international financial markets implying that the Feldstein-Horioka puzzle is less important in the EU. Copyright Kluwer Academic Publishers 2003

Keywords: cointegration; current account deficit; Feldstein-Horioka puzzle; fiscal policy; hysteresis (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

Downloads: (external link)
http://hdl.handle.net/10.1023/B:ECOP.0000012256.88112.c2 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:ecopln:v:36:y:2003:i:2:p:135-152

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10644/PS2

DOI: 10.1023/B:ECOP.0000012256.88112.c2

Access Statistics for this article

Economic Change and Restructuring is currently edited by George Hondroyiannis

More articles in Economic Change and Restructuring from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().