IDEAS home Printed from https://ideas.repec.org/a/oup/cjrecs/v2y2009i2p211-227.html
   My bibliography  Save this article

International capital mobility: linking the Feldstein--Horioka puzzle to the trade and equity home bias puzzles

Author

Listed:
  • Clemens J. M. Kool
  • Linda M. Keijzer

Abstract

We revisit the Feldstein--Horioka (FH) puzzle using data for 23 Organisation for Economic Co-operation and Development (OECD) countries for the period 1973--2003. We document a sharp decline in the FH coefficient from the mid-1990s onward, supporting the hypothesis of increased economic and financial integration. Subsequently, we extend the literature and use a non-linear specification with interaction terms to empirically show that observed decreases in equity home bias (EHB) and increases in trade openness are structurally linked to the time variation in the FH coefficient. Thus, this paper empirically establishes a structural link between three puzzles in international macroeconomics and finance: the FH puzzle, the EHB puzzle and the trade home bias puzzle. Copyright 2009, Oxford University Press.

Suggested Citation

  • Clemens J. M. Kool & Linda M. Keijzer, 2009. "International capital mobility: linking the Feldstein--Horioka puzzle to the trade and equity home bias puzzles," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 2(2), pages 211-227.
    • Handle: RePEc:oup:cjrecs:v:2:y:2009:i:2:p:211-227
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/cjres/rsp005
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nils Holinski & Clemens J. M. Kool & Joan Muysken, 2012. "Persistent macroeconomic imbalances in the Euro area: causes and consequences," Review, Federal Reserve Bank of St. Louis, vol. 94(Jan), pages 1-20.
    2. Kumar, Saten & Sen, Rahul & Srivastava, Sadhana, 2014. "Does economic integration stimulate capital mobility? An analysis of four regional economic communities in Africa," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 29(C), pages 33-50.
    3. Clemens Kool & Erik de Regt & Tom van Veen, 2013. "Money Overhang, Credit Overhang and Financial Imbalances in the Euro Area," CESifo Working Paper Series 4476, CESifo.
    4. Gan, Pei-Tha, 2014. "The precise form of financial integration: Empirical evidence for selected Asian countries," Economic Modelling, Elsevier, vol. 42(C), pages 208-219.
    5. Willem H. Buiter & Stefan Gerlach & Clemens J.M. Kool & José Viñals, 2010. "The Quest for Stability: the macro view," SUERF Studies, SUERF - The European Money and Finance Forum, number 2010/2 edited by Morten Balling, Jan Marc Berk and Marc-Olivier Strauss-Kahn, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:cjrecs:v:2:y:2009:i:2:p:211-227. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/cjres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.