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

Eyuboglu S., ÜZAR U.

JOURNAL OF INTERNATIONAL TRADE & ECONOMIC DEVELOPMENT, vol.29, no.4, pp.399-419, 2020 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 29 Issue: 4
  • Publication Date: 2020
  • Doi Number: 10.1080/09638199.2019.1694965
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Geobase
  • Page Numbers: pp.399-419
  • Keywords: Lucky seven countries, Feldstein-Horioka puzzle, bootstrap panel cointegration, asymmetric causality, ECONOMIC-GROWTH, PANEL COINTEGRATION, ENERGY-CONSUMPTION, OECD COUNTRIES, INVESTMENT, BREAKS
  • Karadeniz Technical University Affiliated: Yes


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) and Westerlund (2007) 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. Konya (2006) 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.