-Horioka puzzle ; capital mobility ; capital flows ; saving ; investment ; Adam Smith ; invisible hand …

, which is that even though global financial markets appear to be integrated, levels of saving and investment are correlated …

investment rate on the domestic saving rate, the estimated coefficient is significantly larger than what would be expected in a … world characterized by high capital mobility) should have never been labeled as such. First, we show that the investment and … saving series typically used in empirical exercises to test the Feldstein-Horioka thesis are not appropriate for testing …

This paper argues that the 40-year-old Feldstein-Horioka “puzzle” (i.e., in a regression of the domestic investment … rate on the domestic saving rate, the estimated coefficient is significantly larger than expected in a world with high … to their regression, one gets the accounting identity that relates the capital account, domestic investment, and domestic …

. If capital is immobile, investment must equal domestic saving, i.e., b=1, and if investment is unrelated to domestic … saving, then b=0. Using data from OECD countries 1960-74, Feldstein and Horioka (FH) obtained values for b not significantly …

the relationship between domestic investment and saving: whatever the transition mechanism specified, each test strongly … countries (1960-2000), we test the influence of various threshold variables (degree of openness, size, demography) on the saving …