The Feldstein-Horioka Puzzle for Eurasian Economies
Avrasya Ekonomileri için Feldstein-Horioka Bilmecesi

Serap Bedir, Dilek Özdemir, Kerem Karabulut
2014 International Conference on Eurasian Economies 2014   unpublished
The presence of a relation between saving and investment which has been debated in the empirical literature following the pioneering of Feldstein-Horioka (1980) is paramount to the determination of economic policies. Feldstein-Horioka (1980) stated that the relationship between saving and investment depends on the degree of international capital mobility. A high correlation between saving and investment is often taken as evidence of capital immobility. The purpose of this study is to
more » ... dy is to empirically test the validity of the Feldstein-Horioka puzzle. The model developed within the context of the theoretical framework was estimated by means of panel ARDL (auto-regressive distributed lag bound test) approach which is a panel vector error correction method using the data for Eurasian economics for the period 1992-2011. The data is taken from World Development Indicators. The short-run analysis supports the Feldstein-Horioko hypothesis and captured from error correction model (ECM). The results of the bounds test suggest that there is a long run relationship between savings and investment. Therefore, the Feldstein–Horioko correlations are not a puzzle for our sample because of the low correlation and high capital mobility.
doi:10.36880/c05.00916 fatcat:47hrqrn7fjbbfm5u47gvzs6j2i