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Saving and Investment in Euroland, the EU and the enlarged EU

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  • G. Rossini
  • P. Zanghieri

Abstract

The Feldstein-Horioka puzzle has been recently included among the six major puzzles of international economics. It is a paradox that belongs to the large group of home biases that have become stylized facts. We investigate the F-H puzzle according to different definitions of Europe and by introducing a more suitable investment variable that results after netting out FDI. We find that the F-H coefficient decreases in all cases in which we adopt the correct investment definition. Over time we see a decrease of the F-H coefficient during the 1980’s and an increase over the 1990’s as a proof that the Maastricht Treaty discipline has made current account targeting biting. This does not happen for opting out and Eastern Europe countries.

Suggested Citation

  • G. Rossini & P. Zanghieri, 2002. "Saving and Investment in Euroland, the EU and the enlarged EU," Working Papers 438, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:438
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    Cited by:

    1. Eleftherios Makedonas & Stavros Tsopoglou, 2013. "Does Accounting for Foreign Capital Flows help to solve the Feldstein and Horioka Puzzle? The Case of Norway," Economic Issues Journal Articles, Economic Issues, vol. 18(1), pages 39-56, March.
    2. Forster, Michael & Jesuit, David & Smeeding, Timothy, 2003. "Regional Poverty and Income Inequality in Central and Eastern Europe: Evidence from the Luxembourg Income Study," WIDER Working Paper Series 065, World Institute for Development Economic Research (UNU-WIDER).
    3. Claudia Biancotti, 2006. "A Dual-Regime Utility Model for Poverty Analysis," Temi di discussione (Economic working papers) 603, Bank of Italy, Economic Research and International Relations Area.

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