An Exploratory Inquiry of the Feldstein-Horioka Puzzle in Selected Southeast Asian Countries
Journal of Transnational Management, 2009, Vol. 14, Issue 4, pp. 259-276
Posted: 30 Jun 2012 Last revised: 1 Oct 2012
Date Written: 2009
Abstract
This study reexamines the Feldstein-Horioka puzzle in selected Southeast Asian countries: Indonesia, the Philippines, and Thailand. The long-run equilibrium is estimated using the bounds testing procedure by Pesaran, Shin, and Smith (2001) while the causal relationship between savings and investment utilizes Granger non-causality test of Toda and Yamamoto (1995). The estimators from these two procedures do not seem to support a positive correlation between savings and investment in these three countries as found by Feldstein and Horioka (1980).
Keywords: capital mobility, causality, cointegration, investment and savings, the Feldstein-Horioka puzzle
JEL Classification: E21, E22
Suggested Citation: Suggested Citation