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Title: |
Causality between Investment and Saving Rates: Inferences for the
International Mobility of Capital among OECD Countries |
| Author: |
Leachman, Lori
L. |
| Author
Affiliation: |
Winthrop
College |
| Source: |
International Economic Journal, Autumn 1990, v. 4, no. 3, pp. 23-39 |
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Publication Date: |
Autumn 1990 |
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Abstract: |
This paper explores the capital mobility
issue by inspecting the causal relationship between domestic saving and
investment rates in 24 OECD countries. Closed economy macroeconomic
models illustrate the need for national saving to equal investment in
equilibrium. Thus, the existence of any form of causal relationship
between these two series implies that markets are not perfectly open,
hence, capital flows are impeded. Therefore, the paper employs two
standard techniques for causality testing, the Haugh test and variance
decomposition, to determine the causal structure. The results are mixed
but quite interesting in light of other recent works in this area. |
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