Feldstein-Horioka Puzzle

Abstract

This paper applies cointegration techniques to test for the Feldstein-Horioka puzzle using annual data for the period 1970 to 2016 for 5 OECD countries and China. We analyze this group of countries through unit root and cointegration tests with and without structural breaks, applied to the time series of savings and investment for the different countries. In terms of the correlation between saving and investment, despite the increase in capital mobility due to the growing globalization, the coefficients obtained that relate both series are still significant in some countries.