Savings investment correlations and capital mobility in developing countries
AbstractThe author estimates savings and investment correlations for 58 developing countries to assess the capital mobility (in the Feldstein-Horioka sense) in these countries. Using a new estimation technique (fully modified ordinary least squares) - which simultaneously corrects for serial correlation, endogeneity, and sample bias (asymptotically) - the author finds that many developing countries are financially integrated in the long run. More important, the estimates from this robust estimation technique indicate that savings-investment correlations are lower for middle-income than for lower-income countries. The author also provides evidence of capital mobility for several of these countries in the short run.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 1211.
Date of creation: 31 Oct 1993
Date of revision:
Economic Theory&Research; Banks&Banking Reform; Macroeconomic Management; Statistical&Mathematical Sciences; Scientific Research&Science Parks;
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