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Impact of the Global Financial Crisis on the Level of Capital Mobility in EU Members

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  • Ketenci, Natalya

Abstract

This study investigates the level of capital mobility in European Union members and the impact of the global financial crisis on the capital mobility indicators. The capital mobility is examined by testing the Feldstein-Horioka puzzle. This study estimates quarterly data for 27 European countries for the period of 1995-2013 and employs the standard and dynamic generalized method of moments (GMM) estimation techniques. The results of the standard GMM estimations did not provide the evidence to support the Feldstein-Horioka puzzle, where the saving retention coefficient demonstrates the high capital mobility in European Union countries. However the results of the dynamic GMM estimations indicates that inclusion of historical values of investment and savings in the regression decreases the level of capital mobility in European countries. The consideration of the global financial crisis in the model revealed insignificant changes in capital mobility indicators, which means that the inclusion of the global financial crisis does not have an impact on the capital mobility analysis in European countries.

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  • Ketenci, Natalya, 2018. "Impact of the Global Financial Crisis on the Level of Capital Mobility in EU Members," MPRA Paper 100075, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:100075
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    Cited by:

    1. Mariam Camarero & Alejandro Muñoz & Cecilio Tamarit, 2021. "50 Years of Capital Mobility in the Eurozone: Breaking the Feldstein-Horioka Puzzle," Open Economies Review, Springer, vol. 32(5), pages 867-905, November.
    2. Mariam Camarero & Alejandro Muñoz & Cecilio Tamarit, 2022. "The rise and fall of global financial flows in EU 15: new evidence using dynamic panels with common correlated effects," Working Papers 2212, Department of Applied Economics II, Universidad de Valencia.
    3. Martins, António, 2024. "Macro fundamentals and the resurgence of the Feldstein–Horioka puzzle in Europe," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).

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    More about this item

    Keywords

    Capital mobility; Feldstein-Horioka puzzle; saving-investment association; generalized method of moments (GMM); EU;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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