Are saving and investment cointegrated? An ARDL bounds testing approach

Glauco De Vita, Andrew Abbott

    Research output: Contribution to journalArticlepeer-review

    84 Citations (Scopus)

    Abstract

    Using the newly developed ARDL bounds testing procedure, we find that, as implied by the intertemporal budget constraint, U.S. saving and investment rates cointegrate in all sample periods considered. Our results also show that the saving–investment correlation weakens after 1971, suggesting that the Feldstein–Horioka approach provides an at least partially informative measure of capital mobility.
    Original languageEnglish
    Pages (from-to)293-299
    Number of pages7
    JournalEconomics Letters
    Volume77
    Issue number2
    Early online date9 Jun 2002
    DOIs
    Publication statusPublished - Oct 2002

    Keywords

    • Capital mobility
    • Cointegration
    • Feldstein–Horioka puzzle
    • Saving–investment

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