Feldstein-Horioka Puzzle for a Panel of 14 CEE Countries: Empirical Evidence

20 Pages Posted: 20 Jun 2012

See all articles by Dushko Josheski

Dushko Josheski

University Goce Delcev

Darko Lazarov

University Goce Delcev

Date Written: June 20, 2012


In this paper we investigate Feldstein Horioka puzzle for 14 CEE countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Greece, Hungary, Kosovo, Latvia, Lithuania, Macedonia, Estonia, Poland, Romania, Serbia). In our paper when we investigate the whole sample of 14 CEE countries we find less positive association between investment and savings meaning that capital is highly mobile. While when we regress the subsample of those countries from the sample which are EU members we find the lowest coeffcient of association between investment and saving therefore capital is highly mobile in those countries.While in the Non-EU members from this CEE countires the coeficient is highest 0.13, meaning there is lowest capital mobility. Unit root tests proved that in this sample of countries savings are I(1) or I(2) process, and investments are stationary.

Keywords: Investment savings correlation, stationarity, capital mobility, macroeconomic puzzles

JEL Classification: F41, N1

Suggested Citation

Josheski, Dushko and Lazarov, Darko, Feldstein-Horioka Puzzle for a Panel of 14 CEE Countries: Empirical Evidence (June 20, 2012). Available at SSRN: https://ssrn.com/abstract=2088247 or http://dx.doi.org/10.2139/ssrn.2088247

Dushko Josheski (Contact Author)

University Goce Delcev ( email )

+389 32 550 000 (Phone)
+389 32 390 700 (Fax)

HOME PAGE: http://www.ugd.edu.mk/

Darko Lazarov

University Goce Delcev ( email )

PO box 201
Stip, 2000
+389 550 317 (Phone)

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