INVESTMENT AND SAVING INEQUALITY: THE CASE OF E7 COUNTRIES
YATIRIM VE TASARRUF EŞİTSİZLİĞİ: E7 ÜLKELERİ ÖRNEĞİ

Author : Sefa ÖZBEK -Ferid ÖNDER
Number of pages : 711-725

Abstract

As a result of globalization, in the beginning of 1990s; international financial and capital movements have increased and an intense flow of capitalizm took place from developed countries to on going developing countries. The integration of financial markets allows efficient allocation of savings and investments worldwide. While these capital movements can increase the investments in the countries, they can affect the growth positively; it may also lead to financial instability. Therefore, the fact that investments and savings are not equal can create problems for countries. In this study, the savings-investment relationship in the E7 countries, which has a relatively lower saving rate, is analyzed. A new generation of panel econometric tests have been conducted with the 1980-2018 annual data. According to the results, the Feldstein-Horioka hypothesis is valid and the investments are financed at a relatively low level by the international financial markets.

Keywords

Feldstein-Horioka Hypothesis, Panel Data Analysis, Capital Mobility, E7 Countries

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