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Saving, investment, and capital mobility: A comment on Leachman

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  • Jakob Haan
  • Clemens Siermann

Abstract

In this note we use a consistent long-run data set recently published by Maddison (1991) for 10 countries to examine the long-run relationship between saving and investment. In contrast to recent findings of Leachman (1991) we conclude that saving and investment are cointegrated in many countries. Our results suggest that aggregate demand and supply shocks explain much of the time series correlation between total saving and investment. Copyright Kluwer Academic Publishers 1994

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  • Jakob Haan & Clemens Siermann, 1994. "Saving, investment, and capital mobility: A comment on Leachman," Open Economies Review, Springer, vol. 5(1), pages 5-17, March.
    • Handle: RePEc:kap:openec:v:5:y:1994:i:1:p:5-17
    DOI: 10.1007/BF01000740
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    1. Martin Feldstein, 1991. "Domestic Saving and International Capital Movements in the Long Run and the Short Run," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 331-353, National Bureau of Economic Research, Inc.
    2. Jeffrey A. Frankel, 1985. "International capital mobility and crowding-out in the U.S. economy: imperfect integration of financial markets or of goods markets?," Proceedings, Federal Reserve Bank of St. Louis, pages 33-74.
    3. Maddison, A., 1991. "A Long Run Perspective on Saving," Papers 443, Groningen State, Institute of Economic Research-.
    4. Murphy, Robert G., 1984. "Capital mobility and the relationship between saving and investment rates in OECD countries," Journal of International Money and Finance, Elsevier, vol. 3(3), pages 327-342, December.
    5. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    6. Martin Feldstein & Philippe Bacchetta, 1991. "National Saving and International Investment," NBER Chapters, in: National Saving and Economic Performance, pages 201-226, National Bureau of Economic Research, Inc.
    7. Michael Dooley & Jeffrey Frankel & Donald J. Mathieson, 1987. "International Capital Mobility: What Do Saving-Investment Correlations Tell Us?," IMF Staff Papers, Palgrave Macmillan, vol. 34(3), pages 503-530, September.
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    Cited by:

    1. Herwartz, H. & Xu, F., 2010. "A functional coefficient model view of the Feldstein-Horioka puzzle," Journal of International Money and Finance, Elsevier, vol. 29(1), pages 37-54, February.
    2. Joakim Westerlund, 2006. "Testing for Panel Cointegration with Multiple Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(1), pages 101-132, February.
    3. Guzel, Adnan & Ozdemir, Zeynel Abidin, 2011. "The Feldstein-Horioka puzzle in the presence of structural shifts: The case of Japan versus the USA," Research in International Business and Finance, Elsevier, vol. 25(2), pages 195-202, June.
    4. Abu N.M. Wahid & Mohammad Salahuddin & Abdullah M. Noman, 2010. "Savings and investment in South Asia," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 37(6), pages 658-666, November.
    5. Yannick BINEAU, 2010. "A Empirical Assessment of the Feldstein and Horioka Literature," EcoMod2010 259600030, EcoMod.
    6. Jos Jansen, W, 1996. "Estimating saving-investment correlations: evidence for OECD countries based on an error correction model," Journal of International Money and Finance, Elsevier, vol. 15(5), pages 749-781, October.
    7. Kumar Narayan, Paresh, 2005. "The relationship between saving and investment for Japan," Japan and the World Economy, Elsevier, vol. 17(3), pages 293-309, August.
    8. Coakley, Jerry & Kulasi, Farida, 1997. "Cointegration of long span saving and investment," Economics Letters, Elsevier, vol. 54(1), pages 1-6, January.
    9. Moreno, Ramon, 1997. "Saving-investment dynamics and capital mobility in the US and Japan," Journal of International Money and Finance, Elsevier, vol. 16(6), pages 837-863, December.
    10. Apergis, Nicholas & Tsoumas, Chris, 2009. "A survey of the Feldstein-Horioka puzzle: What has been done and where we stand," Research in Economics, Elsevier, vol. 63(2), pages 64-76, June.
    11. Shabbir Ahmad, 2017. "Investment and Saving Relationship in South Asia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 726-729.

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