The Feldstein-Horioka Fact
30 Pages Posted: 26 Feb 2008
Date Written: February 2008
This paper shows that general equilibrium effects can partly rationalize the high correlation between saving and investment rates observed in OECD countries. We find that once controlling for general equilibrium effects the saving-retention coefficient remains high in the 70's but decreases considerably since the 80's, consistently with the increased capital mobility in OECD countries.
Keywords: Saving-Investment Correlation, Capital Mobility, International Comovement, Dynamic Factor Model
JEL Classification: C23, F32, F41
Suggested Citation: Suggested Citation