Assessing international capital mobility in East Asian economies: a panel error-correction approach

Eng, Yoke-Kee and Habibullah, Muzafar Shah (2006) Assessing international capital mobility in East Asian economies: a panel error-correction approach. Journal of the Asia Pacific Economy, 11 (4). pp. 411-423. ISSN 1354-7860

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Official URL: http://dx.doi.org/10.1080/13547860600923676

Abstract

This study assesses financial integration and the degree of international capital mobility in the East Asian region by analyzing the dynamics of national saving-investment relationships. Following the work of Pelgrin & Schich (2004)25. Pelgrin , F. and Schich , S. 2004 . National saving-investment dynamics and international capital mobility , Bank of Canada . Working Paper 2004-14 View all references, we interpret the close relationship between national saving and investment in the long run reflecting a solvency constraint and focus on the short term saving investment analysis relationship to assess the degree of capital mobility. Applying the panel error – correction technique proposed by Pesaran et al. (1999)27. Pesaran , M. H. and Shih , Y. An autoregressive distributed lag modelling approach to cointegration analysis . Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium . Edited by: Strom , S. Cambridge : Cambridge University Press . View all references, our empirical results suggest that there exists a long-run relationship between saving and investment and that the short-run is driven by the extent of the gap between current and long-run equilibrium values. The low estimated values of the short-run coefficient of the changes in the saving rate signal some degree of capital mobility.

Item Type:Article
Keyword:Dynamic heterogeneous panels, International capital mobility, Feldstein-Horioka puzzle
Subject:Capital movements - Asia,East
Subject:Saving and investment - Asia,East
Subject:International finance
Faculty or Institute:Faculty of Economics and Management
DOI Number:10.1080/13547860600923676
Altmetrics:http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.1080/13547860600923676
ID Code:18124
Deposited By: Azwana Abdul Rahman
Deposited On:26 Aug 2011 05:11
Last Modified:26 Aug 2011 05:11

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