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Capital mobility in saving and investment: A time-varying coefficients approach

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  • Evans, Paul
  • Kim, Bong-Han
  • Oh, Keun-Yeob

Abstract

This paper uses a model with time-varying coefficients in order to track changes in Feldstein-Horioka saving-retention coefficients over time. To the extent that such coefficients measure international capital mobility, the main empirical findings are as follows. First, the stability of the saving-retention coefficient is strongly rejected. Second, capital has long been perfectly mobile in Canada. Third, capital mobility has never been high in the United States. Fourth, capital was more mobile in Japan and the United Kingdom at the turn of the 20th century than it has been during the postwar period. Capital mobility has risen in Argentina, Italy and Sweden since around 1970. Finally, capital mobility for most of the countries considered has not monotonically increased during the postwar period.

Suggested Citation

  • Evans, Paul & Kim, Bong-Han & Oh, Keun-Yeob, 2008. "Capital mobility in saving and investment: A time-varying coefficients approach," Journal of International Money and Finance, Elsevier, vol. 27(5), pages 806-815, September.
  • Handle: RePEc:eee:jimfin:v:27:y:2008:i:5:p:806-815
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    References listed on IDEAS

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    Cited by:

    1. Drakos, Anastassios A. & Kouretas, Georgios P. & Stavroyiannis, Stavros & Zarangas, Leonidas, 2017. "Is the Feldstein-Horioka puzzle still with us? National saving-investment dynamics and international capital mobility: A panel data analysis across EU member countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 47(C), pages 76-88.
    2. Ko, Jun-Hyung & Funashima, Yoshito, 2016. "On the Sources of the Feldstein-Horioka Puzzle across Time and Frequencies," MPRA Paper 75297, University Library of Munich, Germany.
    3. Loesse Esso, 2012. "Re-examining the saving-investment nexus: threshold cointegration and causality evidence from the ECOWAS," Economic Change and Restructuring, Springer, vol. 45(3), pages 193-220, August.
    4. Balázs Varga & Ádám Plajner, 2012. "Puzzling Out Feldstein-Horioka: an Extensive Analysis using Time Varying Parameter Models," EcoMod2012 4525, EcoMod.
    5. Zodrow, George R., 2010. "Capital Mobility and Capital Tax Competition," National Tax Journal, National Tax Association, vol. 63(4), pages 865-901, December.

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