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Savings And Investment In India: The Feldstein Horioka Puzzle

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  • SESHAIAH, S. Venkata

Abstract

The main objective of this paper is to investigate the degree of integration of the Indian economy into international capital markets using the analytical frame work proposed by Feldstein Horioka. For this purpose we have used the annual data on savings and investment rates over the period 1970-2012. To examine the time series properties of the data we have employed various unit root and co integration test. The results reveal that there in short run there is moderate capital mobility and long run the savings and investment rates are not moving together indicating the absence of Feldstein Horioka puzzle for the Indian Economy.

Suggested Citation

  • SESHAIAH, S. Venkata, 2012. "Savings And Investment In India: The Feldstein Horioka Puzzle," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(2).
  • Handle: RePEc:eaa:aeinde:v:12:y:2012:i:2_14
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    References listed on IDEAS

    as
    1. W. Jansen, 1998. "Interpreting Saving-Investment Correlations," Open Economies Review, Springer, vol. 9(3), pages 207-219, July.
    2. Yamori, Nobuyoshi, 1995. "The relationship between domestic savings and investment: The Feldstein-Horioka test using Japanese regional data," Economics Letters, Elsevier, vol. 48(3-4), pages 361-366, June.
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    More about this item

    Keywords

    India; Feldstein-Horioka Puzzle; Savings; Investment;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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