Adam Smith's Answer to the Feldstein-Horioka Paradox: The Invisible Hand Revisited
AbstractIn this paper, we show that Adam Smith pointed out the existence of the Feldstein-Horioka Paradox or Puzzle and even gave an explanation for it morethan 200 years before the publication of Feldstein and Horioka (1980). Smith argues that it is the pursuit of their own security that leads owners of capital to invest their capital in their own country to as great an extent as possible and that it is the pursuit of security rather than the pursuit of profit that leads individuals to promote the good of society as a whole via the ginvisible hand.h
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Bibliographic InfoPaper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0778.
Date of creation: May 2010
Date of revision:
Other versions of this item:
- Yasutomi, Ayumu & Horioka, Charles Yuji, 2011. "Adam Smith's answer to the Feldstein-Horioka Paradox: The invisible hand revisited," Economics Letters, Elsevier, vol. 110(1), pages 36-37, January.
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- Martin Feldstein & Charles Horioka, 1979.
"Domestic Savings and International Capital Flows,"
NBER Working Papers
0310, National Bureau of Economic Research, Inc.
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