Is the Feldstein–Horioka puzzle valid in lucky seven countries?

OpenAlex İngilizce

In recent years, seven countries, called lucky seven have come to the fore due to improvements in governance quality and economic growth. Thus, examining the investment-saving nexus, which is an important factor of sustainable growth, is very important in the creation of economic policies. In this paper, the nexus between savings and investments in lucky seven countries are examined during the period 1990–2017. Westerlund (2006 Westerlund, J. 2006. “Testing for Panel co-Integration with Multiple Structural Breaks.” Oxford Bulletin of Economics and Statistics 68 (1): 101–132.[Crossref], [Web of Science ®] , [Google Scholar]) and Westerlund (2007 Westerlund, J. 2007. “Testing for Error Correction in Panel Data.” Oxford Bulletin of Economic and Statistics 69 (6): 709–748.[Crossref], [Web of Science ®] , [Google Scholar]) cointegration test results denote that savings and investments are cointegrated. Common correlated effects mean group (CCEMG) and augmented mean group (AMG) estimation results showed that savings have a significant and positive effect on investments in Indonesia, Mexico, and Poland. Kónya (2006 Kónya, L. 2006. “Exports and Growth: Granger Causality Analysis on OECD Countries with a Panel Data Approach.” Economic Modelling 23 (6): 978–992.[Crossref], [Web of Science ®] , [Google Scholar]) panel causality test results indicate that there is causality running from savings to investments in India and Mexico. Asymmetric test results denote that there is causality from positive shocks of savings to positive shocks of investments in Colombia, India, Kenya, and Mexico. In terms of negative shocks, no causality is determined. The overall results show that the hidden Feldstein–Horioka puzzle is valid in some lucky seven countries.