THE SAVING-INVESTMENT RELATIONSHIPS: A MARKOV SWITCHING CAUSALITY ANALYSIS OF COTE D´IVOIRE AND GHANA

This paper investigates the empirical saving-investment relationships for Côte d’Ivoire and Ghana over the period 1960–1998, using a Markov Switching VAR model. We find regime-dependent causality from saving to investment in Côte d’Ivoire but not in Ghana. In terms of Feldstein and Horioka (1980) capital mobility hypothesis these findings suggest a more capital mobility in Ghana than in Côte d’Ivoire implying that foreign capital flows towards Côte d’Ivoire and not to Ghana during the studied period.