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International Capital Flows and the Frankel-Dooley-Mathieson Puzzle

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  • Shigeyuki Hamori

    (Faculty of Economics, Kobe University)

Abstract

Frankel et al (1986) pointed out that industrialized countries have larger saving rate coefficients than do developing countries in the framework of Feldstein-Horioka puzzle. This is referred to as the Frankel-Dooley-Mathieson puzzle in this paper. This paper extends past analyses by incorporating indices of a domestic institutional and policy environment. Applying the resulting model to Sub-Saharan African countries, saving rate coefficients larger than those previously imagined were obtained. These results are consistent with the reality of capital regulations and other factors resulting in low capital flows in developing countries.

Suggested Citation

  • Shigeyuki Hamori, 2007. "International Capital Flows and the Frankel-Dooley-Mathieson Puzzle," Economics Bulletin, AccessEcon, vol. 15(19), pages 1-12.
    • Handle: RePEc:ebl:ecbull:eb-07o10012
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    References listed on IDEAS

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    Cited by:

    1. Shigeyuki Hamori & Naoko Hamori, 2009. "Introduction of the Euro and the Monetary Policy of the European Central Bank," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 7169, January.
    2. Kam Hon Chu, 2017. "The Feldstein-Horioka puzzle, the Frankel-Dooley-Mathieson puzzle, spurious ratio correlation and measurement errors," Economics Bulletin, AccessEcon, vol. 37(3), pages 2004-2019.

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    Keywords

    capital mobility;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • A0 - General Economics and Teaching - - General

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