European Integration and the Feldstein-Horioka Puzzle

Margarita Katsimi and Gylfi Zoega

No 5180, CESifo Working Paper Series from CESifo

Abstract: We estimate the Feldstein-Horioka equation for the period 1960-2012 and find structural breaks that coincide with the introduction of the European single market in 1993, the introduction of the euro in 1999 and the financial crisis in 2008. The results suggest that the correlation between investment and savings depends on institutions, exchange rate risk and credit risk. Furthermore, we find that the pattern of capital flows within the euro zone reflect differences in output per capita, the rate of growth of output per capita and budget balances.

Keywords: Feldstein-Horioka puzzle; European integration (search for similar items in EconPapers)
JEL-codes: E20 (search for similar items in EconPapers)
Date: 2015
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Related works:
Journal Article: European Integration and the Feldstein–Horioka Puzzle (2016)
Working Paper: European Integration and the Feldstein-Horioka Puzzle (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5180

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