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Christian-Albrechts-Universität zu Kiel

Institut für Volkswirtschaftslehre - Department of Economics
Economics Working Papers

Economics Working Papers: Abstract 2006-06


Nummer

2006-06

Autoren

Helmut Herwartz, Fang Xu

 

Titel

 

Panel data model comparison for empirical saving-investment relations
Abstract The low capital mobility among OECD countries, signalled by a high saving-investment (SI) relation and known as the Feldstein-Horioka puzzle, has triggered a lively discussion in the empirical literature. In this paper, we compare between, pooled, time and country dependent specifications of the SI relation via cross-validation criteria. It is found that the country dependent model is best performing among the four. Secondly, error correction models are uniformly outperformed by static panel models. Thirdly, via scatter diagrams of cross section specific estimates we observe a different time evolution of SI relations for developed and developing economies.

Keywords: Saving-investment relation, Feldstein-Horioka puzzle, model comparison

JEL classification: C33, E21, E22

 

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