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    Saving, investment, and capital mobility in LDCs

    Coakley, Jerry and Hasan, F. and Smith, Ron P. (1999) Saving, investment, and capital mobility in LDCs. Review of International Economics 7 (4), pp. 632-640. ISSN 1467-9396.

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    Abstract

    The Coakley, Kulasi, and Smith current‐account solvency model (Economic Journal, 1996, pp. 620–7) is used to investigate saving and investment in LDCs. This model implies that saving and investment cointegrate with a unit coefficient irrespective of the degree of capital mobility. Panel and conventional unit‐root tests indicate that LDC current accounts are stationary. The Feldstein–Horioka cross‐section regression coefficient for LDCs is lower than the corresponding OECD coefficient, indicating different policy responses in these countries rather than higher capital mobility. Finally, adjustment toward solvency is slower in LDCs, reflecting their vulnerability to external shocks and the impact of financial repression.

    Metadata

    Item Type: Article
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Sarah Hall
    Date Deposited: 27 Oct 2020 17:59
    Last Modified: 30 Nov 2021 15:26
    URI: https://eprints.bbk.ac.uk/id/eprint/41086

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