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The “mother of all puzzles” at thirty: A meta-analysis

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  • Christophe Tavéra
  • Jean-Christophe Poutineau
  • Jean-Sébastien Pentecôte
  • Isabelle Cadoret
  • Arthur Charpentier

Abstract

This paper provides a meta-analysis of 1651 point estimates of Feldstein and Horioka saving retention coefficient from 49 peer-reviewed papers published over three decades. We get two main results. First, correcting for publication bias, we find a consistent underlying coefficient lying between 0.56 and 0.67 for studies using the original paper. Second, heterogeneity reported in the estimates of the Feldstein and Horioka can be explained by a few main factors. In particular, we find evidence that the saving retention coefficient is systematically underestimated with models written in first difference, models using the saving ratio or the current account ratio as the dependent variable instead of the investment ratio, and models including indicators of the public deficit or indicators of the country size as additional explanatory variables.

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  • Christophe Tavéra & Jean-Christophe Poutineau & Jean-Sébastien Pentecôte & Isabelle Cadoret & Arthur Charpentier, 2015. "The “mother of all puzzles” at thirty: A meta-analysis," International Economics, CEPII research center, issue 141, pages 80-96.
  • Handle: RePEc:cii:cepiie:2015-q1-141-5
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    Keywords

    Feldstein-Horioka coefficient; Capital mobility; Saving-investment correlation; Meta-analysis;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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