Financial development, exchange rate regimes and the Feldstein-Horioka puzzle: evidence from the MENA region

Date

2007-04-01

Author

Özmen, Erdal

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

61
views

0
downloads

This article investigates whether the Feldstein and Horioka (1980) argument on domestic saving-investment relationship is supported by the data of the countries in the Middle East and North Africa region when financial development levels and exchange rate regimes are taken into account. To this end, we employ both the Auroregressive Distributed Lag bounds cointegration test and panel mean group procedures. The results support the view that a successful international financial integration requires compatible levels of financial intermediation. The evidence also suggests that saving-investment cointegration is not invariant to exchange rate regimes.

Subject Keywords

Economics and Econometrics

URI

https://hdl.handle.net/11511/47086

Journal

APPLIED ECONOMICS

DOI

https://doi.org/10.1080/00036840500447674

Collections

Department of Economics, Article

Suggestions

OpenMETU
Core

Economic growth and financial development in Turkey: new evidence Soytaş, Uğur (Informa UK Limited, 2011-01-01) We examine the link between financial development and economic growth in Turkey for the period 1991 to 2005 using quarterly data. We use relatively new time series techniques that are less prone to bias to examine this relationship. We also construct a comprehensive financial development index using principal component analysis. When we control for the possible effects of inflation and monetary and fiscal policies on monetary aggregates and the economic growth rate, we fail to find any long-run causality in...
Purchasing power parity in OECD countries: Evidence from panel unit root Kalyoncu, Huseyin; Kalyoncu, Kahraman (Elsevier BV, 2008-05-01) This paper investigates the validity of purchasing power parity (PPP) for 25 OECD countries by using a panel unit-root methodology. The procedure used here is to examine stationarity of real exchange rate. Using ADF unit-root test on single time-series, it is found that real exchange rate of all OECD countries have unit root. This outcome, however, might be due to the generally low power of this test. The aim of this paper is to reconsider this issue by exploiting the extra information provided by the combi...
Macroeconomics of twin targeting in Turkey analytics of a financial computable general equilibrium model TELLİ, ÇAĞATAY; Voyvoda, Ebru; YELDAN, ALP ERİNÇ (Informa UK Limited, 2008-03-01) The paper provides an overview of the post-1998 Turkish economy and constructs a macroeconomic computable general equilibrium (CGE) model to illustrate the real and financial sectoral adjustments of the Turkish economy under the conditionalities of the 'twin targets': on primary surplus to gross national product (GNP) ratio and on the inflation rate. We further utilize the model to study three sets of issues: (i) the critical role of the expanded foreign capital inflows in resolving the macroeconomic impass...
Interdependence of the banking sector and the real sector: evidence from OECD countries Şendeniz Yüncü, İlkay; Aydogan, Kursat (Informa UK Limited, 2008-01-01) This article investigates the validity of the credit view hypothesis in eleven OECD (Organization for Economic Cooperation and Development) countries over the period 1987:QI to 2003:QIII. The existence of a long-run relationship between the banking sector and the real sector is supported by cointegration test results. For some of the countries in the sample, Granger causality tests show the leading role of the banking sector in the real sector, thus supporting the credit view hypothesis, whereas for other c...
Foreign money shocks and the welfare performance of alternative monetary policy regimes Senay, Ozge; Sutherland, Alan (Wiley, 2007-01-01) The welfare properties of monetary policy regimes for a country subject to foreign money shocks are examined in a two-country sticky-price model. Money targeting is found to be welfare superior to a fixed exchange rate when the expenditure switching effect of exchange rate changes is relatively weak, but a fixed rate is superior when the expenditure switching effect is strong. However, price targeting is superior to both these regimes for all values of the expenditure switching effect. A welfare-maximising ...

Citation Formats

E. Özmen, “Financial development, exchange rate regimes and the Feldstein-Horioka puzzle: evidence from the MENA region,” APPLIED ECONOMICS, pp. 1133–1138, 2007, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/47086.