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Revisit Feldstein-Horioka puzzle: evidence from Malaysia

Author

Listed:
  • Chor Foon Tang

    (University of Malaya)

  • Hooi Hooi Lean

    (Economics Program, Universiti Sains Malaysia)

Abstract

The aim of this study is to re-visit the Feldstein and Horioka (1980) puzzle for Malaysia. The conventional bounds testing approach cannot show any evidence of cointegration between savings and investment. However, the result of our proposed rolling bounds test approach shows that the cointegrated relationship varied over time. In particular, the variables are cointegrated only prior to the Asian financial crisis and the Ringgit pegged regime in 1997/98.

Suggested Citation

  • Chor Foon Tang & Hooi Hooi Lean, 2011. "Revisit Feldstein-Horioka puzzle: evidence from Malaysia," Economics Bulletin, AccessEcon, vol. 31(3), pages 2237-2249.
    • Handle: RePEc:ebl:ecbull:eb-10-00332
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    References listed on IDEAS

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    Cited by:

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    2. Muhammad Shahbaz & Mohammad Mafizur Rahman, 2012. "The Dynamic of Financial Development, Imports, Foreign Direct Investment and Economic Growth: Cointegration and Causality Analysis in Pakistan," Global Business Review, International Management Institute, vol. 13(2), pages 201-219, June.
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    More about this item

    Keywords

    Malaysia; Rolling cointegration test; Savings-investment nexus;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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