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FELDSTEIN-HORIOKA PUZZLE: BRIC COUNTRIES EXAMPLES

Year 2018, Volume: 2 Issue: 1, 39 - 50, 04.07.2018

Abstract

In this study four countries which are named BRIC (Brazil, Russia, India, China) relation was examined between savings to GDP and investments to GDP. Previous studies have discussed investment and saving relationships. The Feldstein-Horioka study concludes that the correlation between savings and investment is large and that there is low capital mobility. In globalizing economies capital mobility is increasing. Therefore, according to the obtained data, it will be tried to determine saving and investment amounts in GDP ratio of these countries. The study results support the Feldstein-Horioka Puzzle. A long run positive and significant relationship between savings and investment has been identified. 

References

  • Behera, S. (2015). Saving-Investment Dynamics And Capital Mobility In The Brics, 1970-2013. Applied Econometrics and International Development, 5-22.Bird, R., & Cahoy, D. (2007). The Emerging BRIC Economies: Lessons from Intellectual Property Negotiation and Enforcement. Northwestern Journal of Technology and Intellectual Property, 400-425.But, B., & Morley, B. (2017). The Feldstein-Horioka Puzzle And Capital Mobility: The Role of the Recent Financial Crisis. Economic Systems, 139-150.Cantillon, R. (1952). Essai sur la nature du commerce en général. INEd.Caporale, G., Panopoulou, E., & Pittis, N. (2005). The Feldstein–Horioka Puzzle Revisited: A Monte Carlo Study. Journal of International Money and Finance, 1143-1149.Chang, Y., & Smith, R. (2014). Feldstein–Horioka puzzles. European Economic Review, 98-112.Chen, S., & Shen, C. (2015). Revisiting The Feldstein–Horioka Puzzle With Regime Switching: New Evidence From European Countries. Economic Modelling, 260-269.Chu, K. (2012). The Feldstein-Horioka Puzzle and Spurious Ratio Correlation. Journal of International Money and Finance, 292-309.Coakley, J., & Kulasi, F. (1997). Cointegration of Long Run Saving And Investment. Economics Letters, 1-6.De Vita, G., & Abbott, A. (2002). Are Saving And Investment Cointegrated? An Ardl Bounds Testing Approach. Economics Letters, 293-299.Drakos, A., Kouretas, G., Stavroyiannis, S., & Zarangas, L. (2017). Is The Feldstein-Horioka Puzzle Still With Us? National Saving-Investment Dynamics And International Capital Mobility: A Panel Data Analysis Across Eu Member Countries. Journal of International Financial Markets, Institutions and Money, 76-88.Feldstein, M., & Horioka, C. (1980). Domestic Saving and International Capital Flows. Economic Journal, 314-329.Frankel, J. (1992). Measuring International Capital Mobility: A Review. American Economic Review, 197-202.Frankel, J., & MacArthur, A. (1988). Political vs Currency Premia in International Real Interest Differentials: A Study of Forward Rates for 24 Countries. European Economic Review, 1083-1121.Ghosh, A. (1995). International Capital Mobility Amongst The Major Industrialized Countries: Too Little or Too Much. Economic Journal, 107-128.Gomes, F., Ferreira, A., & Filho, J. (2008). The Feldstein–Horioka Puzzle In South-American Countries: A Time Varying Approach. Applied Economics Letters, 859-863.Gundlach, E., & Sinn, S. (1992). Unit Root Tests Of The Current Account Balance: Implications For International Capital Mobility. Applied Economics, 617-625.Ho, T. (2002). The Feldstein–Horioka puzzle revisited. Journal of International Money and Finance, 555-564.İslamoğlu, A., & Alnıaçık, Ü. (2016). Sosyal Bilimlerde Araştırma Yöntemleri. İstanbul: Beta Yayınları.Jansen , W., & Schultz, G. (1996). Theory-Based Measurement Of The Saving-Investment Correlation With An Application To Norway. Economic Inquiry, 116-132.Jansen, W. (1997). Can The Intertemporal Budget Constraint Explain The Feldstein-Horioka Puzzle? . Economics Letters, 77-83.Ketenci, N. (2012). The Feldstein–Horioka Puzzle and structural breaks: Evidence from EU members. Economic Modelling, 262-270.Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff? A cross-country investigation. The Quarterly Journal of Economics, 1251-1288.Kónya , L. (2015). Saving and Investment Rates In The BRICS Countries. The Journal of International Trade & Economic Development, 429-449.Krol, R. (1996). International Capital Mobility: Evidence From Panel Data. Journal of International Money and Finance, 467-474.Kumar, R., Stauvermann, P., Kumar, N., & Shahzad, S. (2018). Exploring The Effect of Ict and Tourism On Economic Growth: A Study Of Israel. Economic Change and Restructuring, 1-34.Ma, W., & Li, H. (2016). Time-Varying Saving–Investment Relationship And The Feldstein–Horioka Puzzle. Economic Modelling, 166-178.Mamingi, N. (1997). Savings Investment Correlations And Capital Mobility: The Experience Of Developing Countries. Journal of Policy Modeling, 605-626.McClure, J. (1994). The Feldstein-Horioka Puzzle: The Is-Lm Model With Optimal Policy. Open Economies Review, 371-382.Miller, S. (1988). Are Saving and Investment Cointegrated. Economics Letters, 31-34.Nkoro, E., & Uko, A. (2016). Autoregressive Distributed Lag (Ardl) Cointegration Technique: Application And Interpretation. Journal of Statistical and Econometric Methods, 63-91.Obstfeld, M. (1986). Capital Mobility in the World Economy: Theory and Measurement. Carnegie-Rochester Conference Series on Public Policy, 55-103.Ozmen, E., & Parmaksiz, K. (2003). Policy Regime Change And The Feldstein–Horioka Puzzle: The Uk Evidence. Journal of Policy Modeling, 137-149.Pao, H.-T., & Tsai, C.-M. (2010). Co2 Emissions, Energy Consumption And Economic Growth In Bric Countries. Energy Policy, 7850-7860.Pelagidis, T., & Mastroyiannis, T. (2003). The Saving-Investment Correlation In Greece, 1960–1997: Implications For Capital Mobility. The Journal of Policy Modeling, 609-616.Penati, A., & Doonley, M. (1984). Current Account Imbalances and Capital Formation Industrial Countries. International Monetary Fund Staff Papers, 1-24.Quandl: Financial, Economic and Alternative Data. 11 01, 2017 https://www.quandl.com/ Sachs, J. (1981). The Current Account and Macroeconomic Adjustment in The 1970’S. Brookings Papers on Economic Activities, 201-268.Shahiduzzaman, M., & Alam, K. (2014). Information Technology And Its Changing Roles To Economic Growth And Productivity In Australia. Telecommunications Policy, 125-135.Tesar, L. (1991). Savings, Investment And International Capital Flows. Journal of International Economics, 55-78.The World Bank. 11 01, 2017 http://www.worldbank.org/ Thornton, H. (2017). An enquiry into the nature and effects of the paper credit of Great Britain. Routledge.Vos, R. (1988). Savings, Investment And Foreign Capital Flows: Have Capital Markets Become More Integrated? Journal of Development Studies, 310-334.

FELDSTEIN-HORIOKA PUZZLE FOR BRIC COUNTRIES

Year 2018, Volume: 2 Issue: 1, 39 - 50, 04.07.2018

Abstract

In this study four countries which are named BRIC (Brazil, Russia, India, China) relation was examined between savings to GDP and investments to GDP. Previous studies have discussed investment and saving relationships. The Feldstein-Horioka study concludes that the correlation between savings and investment is large and that there is low capital mobility. In globalizing economies capital mobility is increasing. Therefore, according to the obtained data, it will be tried to determine saving and investment amounts in GDP ratio of these countries. The study results support the Feldstein-Horioka Puzzle. A long run positive and significant relationship between savings and investment has been identified.

References

  • Behera, S. (2015). Saving-Investment Dynamics And Capital Mobility In The Brics, 1970-2013. Applied Econometrics and International Development, 5-22.Bird, R., & Cahoy, D. (2007). The Emerging BRIC Economies: Lessons from Intellectual Property Negotiation and Enforcement. Northwestern Journal of Technology and Intellectual Property, 400-425.But, B., & Morley, B. (2017). The Feldstein-Horioka Puzzle And Capital Mobility: The Role of the Recent Financial Crisis. Economic Systems, 139-150.Cantillon, R. (1952). Essai sur la nature du commerce en général. INEd.Caporale, G., Panopoulou, E., & Pittis, N. (2005). The Feldstein–Horioka Puzzle Revisited: A Monte Carlo Study. Journal of International Money and Finance, 1143-1149.Chang, Y., & Smith, R. (2014). Feldstein–Horioka puzzles. European Economic Review, 98-112.Chen, S., & Shen, C. (2015). Revisiting The Feldstein–Horioka Puzzle With Regime Switching: New Evidence From European Countries. Economic Modelling, 260-269.Chu, K. (2012). The Feldstein-Horioka Puzzle and Spurious Ratio Correlation. Journal of International Money and Finance, 292-309.Coakley, J., & Kulasi, F. (1997). Cointegration of Long Run Saving And Investment. Economics Letters, 1-6.De Vita, G., & Abbott, A. (2002). Are Saving And Investment Cointegrated? An Ardl Bounds Testing Approach. Economics Letters, 293-299.Drakos, A., Kouretas, G., Stavroyiannis, S., & Zarangas, L. (2017). Is The Feldstein-Horioka Puzzle Still With Us? National Saving-Investment Dynamics And International Capital Mobility: A Panel Data Analysis Across Eu Member Countries. Journal of International Financial Markets, Institutions and Money, 76-88.Feldstein, M., & Horioka, C. (1980). Domestic Saving and International Capital Flows. Economic Journal, 314-329.Frankel, J. (1992). Measuring International Capital Mobility: A Review. American Economic Review, 197-202.Frankel, J., & MacArthur, A. (1988). Political vs Currency Premia in International Real Interest Differentials: A Study of Forward Rates for 24 Countries. European Economic Review, 1083-1121.Ghosh, A. (1995). International Capital Mobility Amongst The Major Industrialized Countries: Too Little or Too Much. Economic Journal, 107-128.Gomes, F., Ferreira, A., & Filho, J. (2008). The Feldstein–Horioka Puzzle In South-American Countries: A Time Varying Approach. Applied Economics Letters, 859-863.Gundlach, E., & Sinn, S. (1992). Unit Root Tests Of The Current Account Balance: Implications For International Capital Mobility. Applied Economics, 617-625.Ho, T. (2002). The Feldstein–Horioka puzzle revisited. Journal of International Money and Finance, 555-564.İslamoğlu, A., & Alnıaçık, Ü. (2016). Sosyal Bilimlerde Araştırma Yöntemleri. İstanbul: Beta Yayınları.Jansen , W., & Schultz, G. (1996). Theory-Based Measurement Of The Saving-Investment Correlation With An Application To Norway. Economic Inquiry, 116-132.Jansen, W. (1997). Can The Intertemporal Budget Constraint Explain The Feldstein-Horioka Puzzle? . Economics Letters, 77-83.Ketenci, N. (2012). The Feldstein–Horioka Puzzle and structural breaks: Evidence from EU members. Economic Modelling, 262-270.Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff? A cross-country investigation. The Quarterly Journal of Economics, 1251-1288.Kónya , L. (2015). Saving and Investment Rates In The BRICS Countries. The Journal of International Trade & Economic Development, 429-449.Krol, R. (1996). International Capital Mobility: Evidence From Panel Data. Journal of International Money and Finance, 467-474.Kumar, R., Stauvermann, P., Kumar, N., & Shahzad, S. (2018). Exploring The Effect of Ict and Tourism On Economic Growth: A Study Of Israel. Economic Change and Restructuring, 1-34.Ma, W., & Li, H. (2016). Time-Varying Saving–Investment Relationship And The Feldstein–Horioka Puzzle. Economic Modelling, 166-178.Mamingi, N. (1997). Savings Investment Correlations And Capital Mobility: The Experience Of Developing Countries. Journal of Policy Modeling, 605-626.McClure, J. (1994). The Feldstein-Horioka Puzzle: The Is-Lm Model With Optimal Policy. Open Economies Review, 371-382.Miller, S. (1988). Are Saving and Investment Cointegrated. Economics Letters, 31-34.Nkoro, E., & Uko, A. (2016). Autoregressive Distributed Lag (Ardl) Cointegration Technique: Application And Interpretation. Journal of Statistical and Econometric Methods, 63-91.Obstfeld, M. (1986). Capital Mobility in the World Economy: Theory and Measurement. Carnegie-Rochester Conference Series on Public Policy, 55-103.Ozmen, E., & Parmaksiz, K. (2003). Policy Regime Change And The Feldstein–Horioka Puzzle: The Uk Evidence. Journal of Policy Modeling, 137-149.Pao, H.-T., & Tsai, C.-M. (2010). Co2 Emissions, Energy Consumption And Economic Growth In Bric Countries. Energy Policy, 7850-7860.Pelagidis, T., & Mastroyiannis, T. (2003). The Saving-Investment Correlation In Greece, 1960–1997: Implications For Capital Mobility. The Journal of Policy Modeling, 609-616.Penati, A., & Doonley, M. (1984). Current Account Imbalances and Capital Formation Industrial Countries. International Monetary Fund Staff Papers, 1-24.Quandl: Financial, Economic and Alternative Data. 11 01, 2017 https://www.quandl.com/ Sachs, J. (1981). The Current Account and Macroeconomic Adjustment in The 1970’S. Brookings Papers on Economic Activities, 201-268.Shahiduzzaman, M., & Alam, K. (2014). Information Technology And Its Changing Roles To Economic Growth And Productivity In Australia. Telecommunications Policy, 125-135.Tesar, L. (1991). Savings, Investment And International Capital Flows. Journal of International Economics, 55-78.The World Bank. 11 01, 2017 http://www.worldbank.org/ Thornton, H. (2017). An enquiry into the nature and effects of the paper credit of Great Britain. Routledge.Vos, R. (1988). Savings, Investment And Foreign Capital Flows: Have Capital Markets Become More Integrated? Journal of Development Studies, 310-334.
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Details

Primary Language English
Subjects Business Administration
Journal Section case study
Authors

Kemalettin Tanrıseven

Lütfi Bicimveren This is me

Publication Date July 4, 2018
Submission Date April 4, 2018
Acceptance Date July 4, 2018
Published in Issue Year 2018 Volume: 2 Issue: 1

Cite

APA Tanrıseven, K., & Bicimveren, L. (2018). FELDSTEIN-HORIOKA PUZZLE: BRIC COUNTRIES EXAMPLES. Kapadokya Akademik Bakış, 2(1), 39-50.