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| Author: | Coiteux, M. Olivier, S. |
| Title: | The saving retention coefficient in the long run and in the short run: evidence from panel data |
| Journal: | Journal of International Money and Finance
2000 : AUG, VOL. 19:4, p. 535-548 |
| Index terms: | Investments Savings Capital Methodology OECD Models |
| Language: | eng |
| Abstract: | The high correlation between domestic investment and saving found by Feldstein and Horioka (1980) is by now considered a stylized fact. Pooling annual data for 21 OECD countries, Krol challenged this consensus in 1996 and found much lower correlation than is usually admitted in the literature. This paper shows that Krol does not overturn Feldstein and Horioka even if the degree of capital mobility is higher in the short run than in the long run. This apparent contradiction is solved by excluding Luxembourg from the panel and estimating an error-correction form of Krol's fixed-effects model. |
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