International and regional capital mobility in Latin American countries
Abstract
This study examines the role of global, regional and domestic saving for domestic investment financing in the panel of Latin American and Caribbean countries along with its three regional integration blocks, namely SICA, Andean Community and MERCOSUR. Panel regression and rolling-window estimation results reveal that global saving is the main source of domestic investment financing in the region of Latin America and the Caribbean, SICA, Andean Community and MERCOSUR. The role of domestic and regional savings is rather limited, implying that there are weak regional and domestic channels that can funnel domestic and regional savings into investment in the analysed samples. The importance of regional agreement saving is insignificant and decreases over the analysed period except for the Andean Community. The results indicate low financial integration of the member-countries within the three regional trade agreements.
First published online 12 January 2022
Keyword : saving-investment association, regional integration, global saving, Feldstein-Horioka puzzle, capital mobility, cointegration analysis, panel estimation
How to Cite
Yersh, V. (2022). International and regional capital mobility in Latin American countries. Technological and Economic Development of Economy, 28(2), 337–357. https://doi.org/10.3846/tede.2022.15912
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Giannone, D., & Lenza, M. (2009). The Feldstein–Horioka fact. NBER International Seminar on Macroeconomics, 6(1), 103–117. https://doi.org/10.1086/648699
Ginama, I., Hayakawa, K., & Kanmei, T. (2018). Examining the Feldstein–Horioka puzzle using common factor panels and interval estimation. Japan and the World Economy, 48, 11–21. https://doi.org/10.1016/j.japwor.2018.06.001
Ginama, I., Hayakawa, K., & Kanmei, T. (2021). Transition of the Feldstein-Horioka puzzle. Journal of Mathematical Finance, 11(1), 123–151. https://doi.org/10.4236/jmf.2021.111006
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Golub, S. (1990). International capital mobility: Net versus gross stocks and flows. Journal of International Money and Finance, 9(4), 424–439. https://doi.org/10.1016/0261-5606(90)90020-Z
Gordon, R., & Bovenberg, L. (1996). Why is capital so immobile internationally? Possible explanations and implications for capital income taxa-tion. American Economic Review, 86(5), 1057–1075.
Guillaumin, C. (2009). Financial integration in East Asia: Evidence from panel unit root and panel cointegration tests. Journal of Asian Economics, 20(3), 314–326. https://doi.org/10.1016/j.asieco.2009.02.002
Ho, T. (2003). The saving retention coefficient and country-size: The Feldstein–Horioka puzzle reconsidered. Journal of Macroeconomics, 25(3), 387–396. https://doi.org/10.1016/S0164-0704(03)00044-2
Ho, T., & Chiu, R. L. (2001). Country size and investment-saving correlation: A panel threshold error correction model. Eastern Economic Jour-nal, 27(4), 481–490.
Holmes, M. J. (2006). Do Latin American countries have an incentive to default on their external debts? A perspective based on long-run current account behavior. Emerging Markets Finance and Trade, 42(1), 33–49. https://doi.org/10.2753/REE1540-496X420102
Holmes, M. J., & Otero, J. (2016). A pairwise-based approach to examining the Feldstein–Horioka condition of international capital mobility. Em-pirical Economics, 50(2), 279–297. https://doi.org/10.1007/s00181-015-0937-8
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Katsimi, M., & Zeoga, G. (2016). European integration and the Feldstein–Horioka puzzle. Oxford Bulletin of Economics and Statistics, 78(6), 834–852. https://doi.org/10.1111/obes.12130
Kaur, H., & Sarin, V. (2018). An evidence of Feldstein–Horioka puzzle in selected Asian economies. International Journal of Business and Glob-alisation, 21(4), 454–463. https://doi.org/10.1504/IJBG.2018.095761
Ketenci, N. (2010). The Feldstein–Horioka puzzle by groups of OECD members: The panel approach (MPRA Paper No. 25848).
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