A New Look at the Feldstein-Horioka Puzzle: A “European-Regional” Perspective

Jérôme Héricourt and Mathilde Maurel

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: The purpose of this paper consists in assessing the extent of financial integration in theEuropean Union using the Feldstein-Horioka criterion applied on regional data from Regioand national statistical offices, over the period 1995-2000. Several important outcomesare reported by our article. First, we find evidence of zero correlation between savingsand investment inside most of the considered countries, and we are able to rationalizethe few puzzles we face. Second, we find that overall financial integration between EUregions is almost complete. After performing additional investigations on consistent subgroupsof regions, our analysis confirms that the suppression of institutional barriers tocapital mobility is a powerful tool to achieve financial integration. However, it may notbe fully sufficient in some circumstances.

Keywords: regional savings; investment; capital market; capital flows (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (1)

Published in Cahiers Economiques de Bruxelles, 2006, 49 (2), pp.147-168

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Related works:
Journal Article: A new look at the Feldstein-Horioka puzzle: a European-regional perspective (2006)
Working Paper: A New Look at the Feldstein-Horioka Puzzle: A “European-Regional” Perspective (2006)
Working Paper: A new look at the Feldstein-Horioka puzzle: an "European-regional" perspective (2005)
Working Paper: A new look at the Feldstein-Horioka puzzle: an "European-regional" perspective (2005)
Working Paper: A new look at the Feldstein-Horioka puzzle: an "European-Regional" perspective (2005)
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