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Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach

This paper reexamines the status of international capital mobility under the Feldstein-Horioka (1980) hypothesis by comparing the results from the OECD and non-OECD high income categories. Data on savings and investment ratios of 21 OECD and 17 non-OECD countries were analyzed using the dynamic hete...

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Main Authors: Hassan, Ibrahim Bakari, Mohamed, Azali, Lee, Chin
Format: Article
Language:English
Published: Kaunas University of Technology 2014
Online Access:http://psasir.upm.edu.my/id/eprint/37660/1/Feldstein-Horioka%20puzzle%20and%20international%20capital%20mobility%20in%20high%20income%20countries%20a%20pool%20mean%20group%20approach.pdf
http://psasir.upm.edu.my/id/eprint/37660/
http://www.inzeko.ktu.lt/index.php/EE/article/view/3539
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spelling my.upm.eprints.376602015-12-18T01:57:09Z http://psasir.upm.edu.my/id/eprint/37660/ Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach Hassan, Ibrahim Bakari Mohamed, Azali Lee, Chin This paper reexamines the status of international capital mobility under the Feldstein-Horioka (1980) hypothesis by comparing the results from the OECD and non-OECD high income categories. Data on savings and investment ratios of 21 OECD and 17 non-OECD countries were analyzed using the dynamic heterogeneous panel estimators of Pooled Mean Group (PMG), Mean Group (MG) and Dynamic Fixed Effects (DFE). Based on the series of Hausman post-estimation test, result from the PMG is upheld. The saving-retention coefficient, showing the level of international capital mobility, reads 0.89, 0.93 and 0.16 for the high-income group, OECD category and non-OECD category respectively. This suggests lower capital mobility in high-income as a whole and OECD countries, and higher capital mobility in the non-OECD countries. The contradictory findings confirmed that the Feldstein-Horioka saving-retention coefficient is unlikely, a viable option of measuring cross-border capital mobility. Further researches therefore need to re-observe the qualification of saving-retention coefficient in explaining international capital mobility. Kaunas University of Technology 2014 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/37660/1/Feldstein-Horioka%20puzzle%20and%20international%20capital%20mobility%20in%20high%20income%20countries%20a%20pool%20mean%20group%20approach.pdf Hassan, Ibrahim Bakari and Mohamed, Azali and Lee, Chin (2014) Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach. Engineering Economics, 25 (5). pp. 480-486. ISSN 1392-2785; ESSN: 2029-5839 http://www.inzeko.ktu.lt/index.php/EE/article/view/3539 10.5755/j01.ee.25.5.3539
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This paper reexamines the status of international capital mobility under the Feldstein-Horioka (1980) hypothesis by comparing the results from the OECD and non-OECD high income categories. Data on savings and investment ratios of 21 OECD and 17 non-OECD countries were analyzed using the dynamic heterogeneous panel estimators of Pooled Mean Group (PMG), Mean Group (MG) and Dynamic Fixed Effects (DFE). Based on the series of Hausman post-estimation test, result from the PMG is upheld. The saving-retention coefficient, showing the level of international capital mobility, reads 0.89, 0.93 and 0.16 for the high-income group, OECD category and non-OECD category respectively. This suggests lower capital mobility in high-income as a whole and OECD countries, and higher capital mobility in the non-OECD countries. The contradictory findings confirmed that the Feldstein-Horioka saving-retention coefficient is unlikely, a viable option of measuring cross-border capital mobility. Further researches therefore need to re-observe the qualification of saving-retention coefficient in explaining international capital mobility.
format Article
author Hassan, Ibrahim Bakari
Mohamed, Azali
Lee, Chin
spellingShingle Hassan, Ibrahim Bakari
Mohamed, Azali
Lee, Chin
Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach
author_facet Hassan, Ibrahim Bakari
Mohamed, Azali
Lee, Chin
author_sort Hassan, Ibrahim Bakari
title Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach
title_short Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach
title_full Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach
title_fullStr Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach
title_full_unstemmed Feldstein-Horioka puzzle and international capital mobility in high income countries: a pool mean group approach
title_sort feldstein-horioka puzzle and international capital mobility in high income countries: a pool mean group approach
publisher Kaunas University of Technology
publishDate 2014
url http://psasir.upm.edu.my/id/eprint/37660/1/Feldstein-Horioka%20puzzle%20and%20international%20capital%20mobility%20in%20high%20income%20countries%20a%20pool%20mean%20group%20approach.pdf
http://psasir.upm.edu.my/id/eprint/37660/
http://www.inzeko.ktu.lt/index.php/EE/article/view/3539
_version_ 1643832037727010816
score 13.211869

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