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Measuring Capital Mobility in the Asia Pacific Rim

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  • Chan, Tze-Haw
  • Baharumshah, Ahmad Zubaidi

Abstract

This study revisits the Feldstein-Horioka puzzle by investigating the saving-investment nexus through the unit root test, cointegration procedure, unrestricted VAR causality, and dynamic OLS (DOLS). Ten Asia Pacific nations of different level of economic development and financial openness were being examined, using data from 1971-1999. Overall, the long run capital mobility is more apparent for four newly industrialised economies while capital flows in ASEAN countries seem to be more restricted (especially Indonesia and Thailand). As for the US and Japan, their long run saving retention coefficients are in the moderate range (0.56 and 0.45). In brief, our findings indicate that the heftiness of Feldstein-Horioka criterion in measuring capital mobility is more subjected to econometric specifications rather than country size alone.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2208.

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Date of creation: 2003
Date of revision: 2004
Handle: RePEc:pra:mprapa:2208

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Keywords: Feldstein-Horioka puzzle; capital mobility; Asia pacific region; unrestricted VAR causality; dynamic OLS;

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References

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Cited by:
  1. Turkhan Ali Abdul Manap & Gairuzazmi M Ghani, 2012. "Malaysia's Time Varying Capital Mobility," Economics Bulletin, AccessEcon, vol. 32(2), pages 1361-1368.

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