Globalization and the Feldstein-Horioka puzzle

Javed Younas () and Debasish Chakraborty

Applied Economics, 2011, vol. 43, issue 16, 2089-2096

Abstract: Capital account liberalization and the integration of world financial markets should increase capital mobility across countries. This article uses the Feldstein-Horioka savings-investment methodology to examine the impact of economic globalization on the degree of capital mobility in 99 countries over the period 1970 to 2005. Our findings suggest that economic openness and financial market integration have led to increased capital mobility in developed as well as developing countries. However, their effect appears to be larger for the latter. This also implies that countries with more financial openness can run higher current account deficits due to better access to external capital markets. Our results also support the previous findings that foreign aid supplements domestic savings for investment in developing countries.

Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036840903035985 (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:taf:applec:v:43:y:2011:i:16:p:2089-2096

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036840903035985

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().