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A panel cointegration approach to the investment-saving correlation

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Abstract.

This paper augments the empirical literature concerning the Feldstein-Horioka puzzle using non-stationary panel data. Recently developed tests for panel cointegration and panel unit root tests are employed. We find substantial evidence to support the hypothesis of no cointegration in this panel, implying a high degree of international capital mobility. Our results suggest that tests for cointegration in panel data provides a better methodological focus than the magnitude of saving-retention coefficients.

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Authors and Affiliations

  1. Department of Economics, Shih Hsin University, No. 1, Lane 17, Section 1, Mu-Cha Road, Taipei, 11602, Taiwan, R.O.C. (e-mail: tsungwu@cc.shu.edu.tw), , , , , , TW

    Tsung-wu Ho

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  1. Tsung-wu Ho
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First version received: August 1999/Final version accepted: December 2000

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Ho, Tw. A panel cointegration approach to the investment-saving correlation. Empirical Economics 27, 91–100 (2002). https://doi.org/10.1007/s181-002-8360-x

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  • DOI: https://doi.org/10.1007/s181-002-8360-x

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