Policy regime change and the Feldstein-Horioka puzzle: the UK evidence

Date

2003-02-01

Author

Ozmen, E
Parmaksiz, K

Metadata

Show full item record

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

Item Usage Stats

182
views

0
downloads

This study investigates whether the Feldstein and Horioka [Econ. J. 90 (1980) 314.] argument on domestic saving-investment relationship may remain as a "puzzle" when an endogenous structural break corresponding to a major policy regime change is taken into account. To this end, we employ not only the conventional procedures developed for a data generation process without a break, but also some recent methods which allow stationarity around an endogenous break under the alternative hypothesis. The evidence based on the UK annual data from 1948 to 1998 suggests that the long-run relationship between saving and investment disappears after the estimated endogenous structural break point coinciding with the abolition of foreign exchange controls in 1979. (C) 2002 Society for Policy Modeling. Published by Elsevier Science Inc. All rights reserved.

Subject Keywords

UK, Investment, Saving, Feldstein-Horioka puzzle, Capital mobility

URI

https://hdl.handle.net/11511/66143

Journal

JOURNAL OF POLICY MODELING

DOI

https://doi.org/10.1016/s0161-8938(02)00208-9

Collections

Department of Economics, Article

Suggestions

OpenMETU
Core

Investment climate parameters in transition economies : the case of Russia Nikitin, Sergei; Özveren, Eyüp; Department of Economics (2003) This thesis incorporates institutional definition of the economies in transition into the economic analysis of the investment variable. Probability environment of the real world is another point of analysis. Decision-making framework is analyzed and incorporated into analysis as well. Thesis tries to answer questions such as: Why same projects are treated differently in different circumstances. Finally the Russian experience is investigated and used to prove hypothesis about investment climate parameters an...
Exchange Rate Regimes as Thresholds: The Main Determinants of Capital Inflows in Emerging Market Economies Özmen, Erdal (2019-06-14) This study investigates whether the impacts of the main common push (global financial conditions, GFC) and country-specific pull (growth) factors on capital inflows are invariant to the prevailing exchange rate regimes (ERRs) in emerging market economies. Our results suggest that endogenously estimated ERR thresholds do matter especially for the impact of GFC. The impact of GFC is substantially high under more flexible ERRs for all capital inflow types except FDI. FDI inflows are basically determined by the...
Institutional ownership as an additional factor to describe stock returns Uğurlu Yıldırım, Ecenur; Şendeniz Yüncü, İlkay; Department of Business Administration (2018) After the development of asset pricing models, empirical studies have shown that there are inconsistencies between these theoretical models and empirical findings. Due to these inconsistencies, asset-pricing researchers have started to examine a broader set of factors that might affect asset market behavior. As the institutional investors are huge players in the financial markets, and their importance in stock market has increased in last years, it is crucial to understand the impact of institutional invest...
Macroeconomic and institutional determinants of current account deficits Ozmen, E (Informa UK Limited, 2005-07-15) This study empirically investigates the effects of institutional and macroeconomic policy variables on current account deficits (CAD). Based on cross-section data for a broad number of countries, the results suggest that better governance increases whilst 'original sin' decreases the ability of an economy to sustain CAD. Exchange rate flexibility and openness appear to put a discipline on CAD. Consistent with the equity home bias and Feldstein-Horioka puzzle, CAD decrease with country size. The net impacts ...
Financial development and economic fluctuations Tiryaki, Gisele Ferreira (Orta Doğu Teknik Üniversitesi (Ankara, Turkey), 2003-6-1) This paper provides empirical evidence on the link between financial system development and business cycles volatility. Previous studies have shown that economic fluctuations become less pronounced as the financial system of a country develops. This paper reveals that this result is not apparent when dealing with shorter horizons and when considering the behavior of other components of output, such as private investment and consumption. Using a dynamic Generalized Method of Moments technique on a cros...

Citation Formats

E. Ozmen and K. Parmaksiz, “Policy regime change and the Feldstein-Horioka puzzle: the UK evidence,” JOURNAL OF POLICY MODELING, pp. 137–149, 2003, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/66143.