Premium
An Investigation of the Feldstein– H orioka Puzzle for the Association of Southeast Asian Nations Economies
Author(s) -
Wang MuShun
Publication year - 2013
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/1467-8462.12037
Subject(s) - incentive , economics , investment (military) , capital flows , instrumental variable , panel data , capital (architecture) , monetary economics , emerging markets , economy , international economics , macroeconomics , econometrics , microeconomics , geography , archaeology , politics , political science , law , profit (economics)
This article reviews the extensive literature on how to respond to the Feldstein–Horioka puzzle. This study quantitatively investigates the impact of instrumental variables on the correlation between domestic savings and investment. I consider two financial frictions: the economic system and the bank features. I find that the dynamic panel model with instrumental variables produces a savings–investment correlation and that information technology generates capital flows to ensure that countries have an incentive to develop. The findings emphasise the potential benefits associated with developing prospects and capital flow in an increasingly competitive emerging market .