Capital Mobility: An application of Saving-Investment Link for Tunisia

Year 2012, Volume: 2 Issue: 1, 1 - 11, 01.03.2012

Solarin Sakiru Adebola Jauhari Dahalan

Abstract

The paper examines the degree of capital mobility in Tunisia for 1970 to 2009 period,
using Feldstein and Horioka (1980) method of savings and investment comovement. We apply ARDL
bound test to assess comovement between savings and investment; and to compute the savings
retention ratio with FMOLS and DOLS as complements. The results reveal low capital mobility, in
contrary to Maminingi (1997) who note perfect capital immobility in Tunisia. Hence, efforts should be
made by the concerned authorities to evolve policies that will mobilize international capital into the
country.

Keywords

Tunisia, Saving–investment, Cointegration, Causality