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Revisit Feldstein-Horioka puzzle: evidence from Malaysia


  • Chor Foon Tang

    () (University of Malaya)

  • Hooi Hooi Lean

    () (Economics Program, Universiti Sains Malaysia)


The aim of this study is to re-visit the Feldstein and Horioka (1980) puzzle for Malaysia. The conventional bounds testing approach cannot show any evidence of cointegration between savings and investment. However, the result of our proposed rolling bounds test approach shows that the cointegrated relationship varied over time. In particular, the variables are cointegrated only prior to the Asian financial crisis and the Ringgit pegged regime in 1997/98.

Suggested Citation

  • Chor Foon Tang & Hooi Hooi Lean, 2011. "Revisit Feldstein-Horioka puzzle: evidence from Malaysia," Economics Bulletin, AccessEcon, vol. 31(3), pages 2237-2249.
  • Handle: RePEc:ebl:ecbull:eb-10-00332

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    References listed on IDEAS

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    Cited by:

    1. Dilem Yıldırım & Ethem Erdem Orman, 2016. "The Feldstein-Horioka Puzzle in the Presence of Structural Breaks: Evidence from China," ERC Working Papers 1601, ERC - Economic Research Center, Middle East Technical University, revised Jan 2016.

    More about this item


    Malaysia; Rolling cointegration test; Savings-investment nexus;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment


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