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    European integration and the Feldstein–Horioka Puzzle

    Katsimi, M. and Zoega, Gylfi (2016) European integration and the Feldstein–Horioka Puzzle. Oxford Bulletin of Economics and Statistics 78 (6), pp. 834-852. ISSN 0305-9049.

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    Abstract

    We apply the differences-in-differences method to study the effect of the European single market in 1993 and the euro in 1999 on the Feldstein–Horioka equation where countries outside the single market serve as a control group and those within as a treatment group. We find structural breaks that coincide with both events, in addition to the financial crisis in 2008. The results suggest that the correlation between investment and savings depends on institutions, exchange rate risk and credit risk. Furthermore, the pattern of capital flows within the single market leaves a significant part of the flows unexplained by fundamentals.

    Metadata

    Item Type: Article
    School: Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Research Centres and Institutes: Applied Macroeconomics, Birkbeck Centre for
    Depositing User: Gylfi Zoega
    Date Deposited: 25 May 2016 13:40
    Last Modified: 02 Aug 2023 17:24
    URI: https://eprints.bbk.ac.uk/id/eprint/15297

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