Saving, Investment and Capital Mobility in Ldcs

Review of International Economics, January 29, 1998

Posted: 16 Feb 1998

See all articles by Jerry Coakley

Jerry Coakley

University of Essex - Essex Business School

Farida Hasan

Primark Decision Economics

Ron Smith

Birkbeck College

Abstract

We use the Coakley, Kulasi and Smith (1996) current account solvency model to investigate saving and investment in LDCs. This model implies that saving and investment cointegrate with a unit coefficient irrespective of the degree of capital mobility. Our panel and conventional unit root tests indicate that LDC current accounts are stationary. The Feldstein-Horioka cross section regression coefficient for LDCs is lower than the corresponding OECD coefficient indicating different policy responses in these countries rather than higher capital mobility. Finally adjustment toward solvency is slower in LDCs reflecting their vulnerability to external shocks and the impact of financial repression.

JEL Classification: C5, E2, F2

Suggested Citation

Coakley, Jerry and Hasan, Farida and Smith, Ron P., Saving, Investment and Capital Mobility in Ldcs. Review of International Economics, January 29, 1998. Available at SSRN: https://ssrn.com/abstract=58089

Jerry Coakley (Contact Author)

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom
+44 1206 872455 (Phone)
+44 1206 873429 (Fax)

HOME PAGE: http://www.essex.ac.uk/afm/staff/coakley.shtm

Farida Hasan

Primark Decision Economics ( email )

Ron P. Smith

Birkbeck College ( email )

Malet Street
London WC1E 7HX
United Kingdom
+44 207 631 6413 (Phone)
+44 207 631 6416 (Fax)

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