engleski

Testing the Feldstein-Horioka puzzle in the CEE countries

In transition and post-transion period the Central and Southeast European (CEE and SEE) countries have based their development largely on the inflows of foreign capital. The capital mobility in the last twenty years became very liberalized especially in the EU common market. One of the six puzzles in international macroeconomics, the Feldstein-Horioka (FH) puzzle, says that capital market is not perfect and there is a lack of full capital mobility. The goal of this paper is to find out if there is an evidence of FH puzzle in CEE and SEE region or this puzzle is disappeared. By applying panel data analysis (static and dynamic) we found low level of ß, which means that majority of investment in the CEE region, come from the abroad (and that capital is highly mobile). We also identified that GDP growth rate and net inflows of FDI have positive and significant impact on the level of investments ; while population growth and productivity have negative impact.

FH coefficient; CEE countries; capital mobility

nije evidentirano