The Feldstein-Horioka Puzzle Revisited
Catholic University of Brasilia; Institute for Applied Economic Research (IPEA)
Marcelo Abi-Ramia Caetano
Institute of Applied Economic Research (IPEA); Previdencia Social
Applied Economics Letters
This paper shows that the Feldsteins & Horioka (1980) test does not measure capital mobility, but just the variability between domestic and external savings. Furthermore, it concludes that the Coakley, Kulasi & Smith (1996) test for current account solvency, is a necessary, but not sufficient, condition for current account solvency.
JEL Classification: F21Accepted Paper Series
Date posted: May 19, 2000
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