EconPapers    
Economics at your fingertips  
 

The Solution to the Feldstein-Horioka Puzzle

Charles Horioka () and Nicholas Ford

ISER Discussion Paper from Institute of Social and Economic Research, Osaka University

Abstract: The purpose of this paper is to set out a surprisingly simple solution to the Feldstein-Horioka Puzzle or Paradox, which is that even though global financial markets appear to be integrated, levels of saving and investment are correlated across countries because financial markets cannot, by themselves, achieve net transfers of financial capital. This is because net transfers of financial capital require the integration not only of financial markets but also of goods markets and because there are substantial frictions in goods markets (e.g., transport, marketing, and distribution costs, technical standards, certification procedures, tariffs and non-tariff barriers, etc.).

Date: 2017-11
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.iser.osaka-u.ac.jp/library/dp/2017/DP1016.pdf

Related works:
Working Paper: The Solution to the Feldstein-Horioka Puzzle (2017) Downloads
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:dpr:wpaper:1016

Access Statistics for this paper

More papers in ISER Discussion Paper from Institute of Social and Economic Research, Osaka University Contact information at EDIRC.
Bibliographic data for series maintained by Fumiko Matsumoto ().

 
Page updated 2019-05-25
Handle: RePEc:dpr:wpaper:1016