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CAPITAL MOBILITY AND THE FELDSTEIN–HORIOKA PUZZLE: RE‐EXAMINATION OF LESS DEVELOPED COUNTRIES *
Author(s) -
PAYNE JAMES E.,
KUMAZAWA RISA
Publication year - 2006
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2006.00512.x
Subject(s) - estimator , economics , capital (architecture) , sample (material) , investment (military) , econometrics , empirical examination , estimation , statistics , mathematics , actuarial science , physics , thermodynamics , political science , geography , management , archaeology , politics , law
This empirical study extends the work of Coakley et al . ( Manchester School , Vol. 72 (2004), pp. 569–590) with respect to the Feldstein–Horioka puzzle for a sample of 47 developing countries. The study examines the savings–investment relationship through a comparison of the Feldstein–Horioka cross‐section estimator results with the results obtained from a mean group estimator allowing for the cross‐section dependence and permanent shocks to the current account. The mean group estimator results indicate higher capital mobility with a savings coefficient of 0.36, 25 per cent lower than the estimates based on the cross‐section estimator, for the whole sample with little variation across subregions.