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Testing for capital mobility: New evidence from a panel of G7 countries

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  • Narayan, Paresh Kumar
  • Narayan, Seema

Abstract

In this paper, we test the savings-investment relationship for the G7 countries. Upon applying the Gregory and Hansen [Gregory, A.W., Hansen, B.E., 1996. Residual-based tests for cointegration in models with regime shifts, J. Econ. 70, 99-126] residual-based structural break test for cointegration for each of the G7 countries, we did not find any evidence of a cointegrating relationship between savings and investment. Extending the analysis to a panel framework, we could not establish any evidence of panel cointegration. Taken together, our findings suggest that capital in these G7 countries is highly mobile since no long-term relationship exists between savings and investment.

Suggested Citation

  • Narayan, Paresh Kumar & Narayan, Seema, 2010. "Testing for capital mobility: New evidence from a panel of G7 countries," Research in International Business and Finance, Elsevier, vol. 24(1), pages 15-23, January.
  • Handle: RePEc:eee:riibaf:v:24:y:2010:i:1:p:15-23
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    Cited by:

    1. Ketenci, Natalya, 2013. "The Feldstein–Horioka puzzle in groupings of OECD members: A panel approach," Research in Economics, Elsevier, vol. 67(1), pages 76-87.
    2. Ma, Wei & Li, Haiqi, 2016. "Time-varying saving–investment relationship and the Feldstein–Horioka puzzle," Economic Modelling, Elsevier, vol. 53(C), pages 166-178.
    3. Guzel, Adnan & Ozdemir, Zeynel Abidin, 2011. "The Feldstein-Horioka puzzle in the presence of structural shifts: The case of Japan versus the USA," Research in International Business and Finance, Elsevier, vol. 25(2), pages 195-202, June.
    4. Natalya Ketenci, N., 2010. "The Feldstein Horioka Puzzle by groups of OECD members: the panel approach," MPRA Paper 25848, University Library of Munich, Germany.
    5. repec:eee:ecmode:v:69:y:2018:i:c:p:150-159 is not listed on IDEAS
    6. Ekrem ERDEM & Ahmet KOSEOGLU & Ali Gokhan YUCEL, 2016. "Testing the validity of the Feldstein-Horioka Puzzle: New evidence from structural breaks for Turkey," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(607), S), pages 17-26, Summer.
    7. Solarin Sakiru Adebola & Jauhari Dahalan, 2012. "Capital Mobility: An Application of Savings-Investment Link for Tunisia," International Journal of Economics and Financial Issues, Econjournals, vol. 2(1), pages 1-11.
    8. Chen, Shyh-Wei & Shen, Chung-Hua, 2015. "Revisiting the Feldstein–Horioka puzzle with regime switching: New evidence from European countries," Economic Modelling, Elsevier, vol. 49(C), pages 260-269.

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    Keywords

    Savings-investment G7 countries Cointegration;

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