IDEAS home Printed from https://ideas.repec.org/a/rse/wpaper/v5y2013i1p33-43.html
   My bibliography  Save this article

Comparative analysis of the degree of international capital mobility in Tunisia and Morocco: revised Feldstein Horioka approach

Author

Listed:
  • Sarra Ben Slimane

    (Department of Economics, Najran University, Saudi Arabia and LEFA (HEC Carthage,Tunisia))

  • Moez Ben Tahar

    (Department of Economics, Central University, Tunisia and LEFA (HEC Carthage, Tunisia))

  • Zied Essid

    (University of Nice Sophia Antipolis, France)

Abstract

The main purpose of this paper is to assess the degree of capital mobility in Tunisia and Morocco. Using the methodology of Feldstein and Horioka (1980), we test the hypothesis of perfect capital mobility. The methodology that we have applied used time series econometric techniques, which included analyzing the stationary, co-integration and Error-Correction Model. On the other hand, we develop an Augmented Feldstein Horioka model by introducing additional variables to explain more effectively the degree of financial openness in these countries. We interpret the relationship between domestic saving and investment in the long-run as reflecting the solvency constraint. We find that saving and investment display a cointegration relationship that is consistent with the interpretation that a solvency constraint is binding for each country. The short and long run coefficients of correlation are significant and presenting a low value of estimation. We conclude that the degree of capital mobility is relatively high in Maghreb countries (Tunisia and Morocco).

Suggested Citation

  • Sarra Ben Slimane & Moez Ben Tahar & Zied Essid, 2013. "Comparative analysis of the degree of international capital mobility in Tunisia and Morocco: revised Feldstein Horioka approach," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 5(1), pages 33-43, June.
    • Handle: RePEc:rse:wpaper:v:5:y:2013:i:1:p:33-43
    as

    Download full text from publisher

    File URL: http://reaser.eu/RePec/rse/wpaper/R5_3_BenSlimane_p33_43.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Coakley, Jerry & Kulasi, Farida, 1997. "Cointegration of long span saving and investment," Economics Letters, Elsevier, vol. 54(1), pages 1-6, January.
    2. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994. "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?," American Economic Review, American Economic Association, vol. 84(1), pages 84-103, March.
    3. Montiel, Peter J, 1994. "Capital Mobility in Developing Countries: Some Measurement Issues and Empirical Estimates," The World Bank Economic Review, World Bank, vol. 8(3), pages 311-350, September.
    4. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    5. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
    6. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1992. "Dynamics of the trade balance and the terms of trade: the J-curve revisited," Discussion Paper / Institute for Empirical Macroeconomics 65, Federal Reserve Bank of Minneapolis.
    7. Jos Jansen, W, 1996. "Estimating saving-investment correlations: evidence for OECD countries based on an error correction model," Journal of International Money and Finance, Elsevier, vol. 15(5), pages 749-781, October.
    8. Anindya Banerjee & Paolo Zanghieri, 2003. "A New Look at the Feldstein-Horioka Puzzle using an Integrated Panel," Working Papers 2003-22, CEPII research center.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vasudeva N.R. Murthy & Natalya Ketenci, 2021. "The Feldstein–Horioka hypothesis for African countries: Evidence from recent panel error‐correction modelling," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5762-5774, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tarlok Singh, 2007. "Intertemporal Optimizing Models Of Trade And Current Account Balance: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 25-64, February.
    2. Francesca Iorio & Stefano Fachin, 2014. "Savings and investments in the OECD: a panel cointegration study with a new bootstrap test," Empirical Economics, Springer, vol. 46(4), pages 1271-1300, June.
    3. Ricardo Bebczuk & Klaus Schmidt-Hebbel, 2010. "Revisiting the Feldstein-Horioka Puzzle: An institutional sector view," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 69-104, January-D.
    4. Yongsung Chang & Sun-Bin Kim & Jaewoo Lee, 2013. "Accounting for Global Dispersion of Current Accounts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 477-496, July.
    5. Farzad Mirmahboub, 2017. "Financial integration faced with the crisis: comparative cases of Greece and Portugal," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(3), pages 269-284, September.
    6. Joseph P. Byrne & Giorgio Fazio & Norbert Fiess, 2009. "The Global Side of the Investment‐Saving Puzzle," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(5), pages 1033-1040, August.
    7. Lee E. Ohanian & Paulina Restrepo-Echavarria & Mark L. J. Wright, 2018. "Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America," American Economic Review, American Economic Association, vol. 108(12), pages 3541-3582, December.
    8. Apergis, Nicholas & Tsoumas, Chris, 2009. "A survey of the Feldstein-Horioka puzzle: What has been done and where we stand," Research in Economics, Elsevier, vol. 63(2), pages 64-76, June.
    9. Kollias, Christos & Mylonidis, Nikolaos & Paleologou, Suzanna-Maria, 2008. "The Feldstein-Horioka puzzle across EU members: Evidence from the ARDL bounds approach and panel data," International Review of Economics & Finance, Elsevier, vol. 17(3), pages 380-387.
    10. Ketenci, Natalya, 2012. "The Feldstein–Horioka Puzzle and structural breaks: Evidence from EU members," Economic Modelling, Elsevier, vol. 29(2), pages 262-270.
    11. Enrique Martinez-Garcia, 2008. "Globalization and monetary policy: an introduction," Globalization Institute Working Papers 11, Federal Reserve Bank of Dallas.
    12. Jerry Coakley & Ana-Maria Fuertes & Fabio Spagnolo, 2004. "The Feldstein-Horioka puzzle is not as bad as you think," Money Macro and Finance (MMF) Research Group Conference 2003 17, Money Macro and Finance Research Group.
    13. Phiri, Andrew, 2019. "The Feldstein-Horioka Puzzle and the Global Financial Crisis: Evidence from South Africa using Asymmetric Cointegration Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 72(2), pages 139-170.
    14. Chan, Tze-Haw & Baharumshah, Ahmad Zubaidi, 2003. "Measuring Capital Mobility in the Asia Pacific Rim," MPRA Paper 2208, University Library of Munich, Germany, revised 2004.
    15. Natalya Ketenci, N., 2010. "The Feldstein Horioka Puzzle by groups of OECD members: the panel approach," MPRA Paper 25848, University Library of Munich, Germany.
    16. Lee E. Ohanian & Paulina Restrepo-Echavarria & Diana Van Patten & Mark L. J. Wright, 2020. "The Impact of Bretton Woods International Capital Controls on the Global Economy and the Value of Geopolitical Stability: A General Equilibrium Analysis," Working Papers 2020-042, Federal Reserve Bank of St. Louis, revised 15 Sep 2023.
    17. Phiri, Andrew, 2017. "The Feldstein-Horioka puzzle and the global recession period: Evidence from South Africa using asymmetric cointegration analysis," MPRA Paper 79096, University Library of Munich, Germany.
    18. Eiriksson, Agust A., 2011. "The saving-investment correlation and origins of productivity shocks," Japan and the World Economy, Elsevier, vol. 23(1), pages 40-47, January.
    19. Lee Ohanian & Diana Van Patten & Mark Wright & Paulina Restrepo-Echavarria, 2019. "Bretton Woods and the Reconstruction of Europe," 2019 Meeting Papers 665, Society for Economic Dynamics.
    20. Jerry Coakley & Ana‐Maria Fuertes & Fabio Spagnolo, 2004. "Is the Feldstein–Horioka Puzzle History?," Manchester School, University of Manchester, vol. 72(5), pages 569-590, September.

    More about this item

    Keywords

    Feldstein Horioka puzzle; capital mobility; cointegration; Error-Correction Model; Tunisia; Morocco;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rse:wpaper:v:5:y:2013:i:1:p:33-43. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Manuela Epure (email available below). General contact details of provider: https://edirc.repec.org/data/pgsaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.