The verification of regional capital mobility in the Russian Federation: A spatial econometric approach
DOI:
https://doi.org/10.21638/spbu05.2023.105Abstract
In many cases the perfect capital mobility hypothesis is used by default. Therefore, if we follow this idea there should not be any connection between internal savings and investments in a country or at least this connection must be not significant. But some of empirical research demonstrate opposite results. In economic literature this concept is well-known as the “Feldstein — Horioka Puzzle”. Considering the relative lack of studies concerning this theme on the regional level, it seems quite perspective to research the hypothesis from the mesoeconomical point of view. So, the central aim of this article is the verification of regional capital mobility in the Russian Federation, following the logics of the Feldstein — Horioka Puzzle. The main peculiarity of the paper is based on the application a spatial econometric approach. The authors use SLX (spatial lag of X model) and SDM (spatial Durbin model) models to achieve the aim. As the result it was found out that there is almost perfect capital mobility situation on the regional level in the Russian Federation. Hereby the Feldstein — Horioka Puzzle was rejected. Along with it several significant direct and indirect effects were established (for instance, reinforced interaction between geographical neighbors-region, absent of capital flow from some regions and other). The results can be used for the consideration of relatively more efficient regional government policy.
Keywords:
regional economy, investments, savings, regional capital mobility, Feldstein — Horioka Puzzle, spatial econometrics
Downloads
References
Anselin, L. (1995) ‘Local indicators of spatial association — LISA’, Geographical analysis, 2 (27), pp. 93–115.
Bangake, C. and Eggoh, J. C. (2011) ‘The Feldstein — Horioka Puzzle in African countries: A panel cointegration analysis’, Economic Modelling, 28 (3), pp. 939–947.
Bayoumi, T. A. and Rose, A. K. (1993) ‘Domestic Saving and Intra-National Capital Flows’, European Economic Review, 37 (6), pp. 1197–1202.
Bineau, Y. (2014) ‘Regional Capital Mobility within Bulgaria’, Journal of Global Economics, 2 (2). https://doi.org/10.4172/2375-4389.1000112
Chan, K., Dang, V., Lai, J. and Yan, I. (2011) ‘Regional capital mobility in China: 19782006’, Journal of International Money and Finance, 30 (7), pp. 1506 1515.
Coakleya, J., Kulasib, F. and Smith, R. (1998) ‘The Feldstein — Horioka Puzzle and Capital Mobility: A Review’, International Journal of Finance and Economics, 3, pp. 169–188.
Dekle, R. (1996) ‘Saving-investment associations and capital mobility on the evidence from Japanese regional data’, Journal of International Economics, 41 (1–2), pp. 53–72.
Drakos, A. A., Kouretas, G. P. and Vlamis, P. (2018) ‘Saving, investment and capital mobility in EU member countries: a panel data analysis of the Feldstein — Horioka Puzzle’, Applied Economics, 50 (34–35), pp. 3798–3811.
Elhorst, J. P. (2014) Spatial Econometrics: From Cross-Sectional Data to Spatial Panels. Springer-Verlag.
Feldstein, M. and Horioka, Ch. (1980) ‘Domestic savings and international capital flows’, The Economic Journal, 358 (90), pp. 314–329.
Harberger, A. C. (1980) ‘Vignettes on the world capital market’, American Economic Review Papers and Proceedings, 70 (2), pp. 331−337.
Irandoust, M. (2017) ‘Saving and investment causality: implications for financial integration in transition countries of Eastern Europe’, International Economics and Economic Policy. https://doi.org/10.1007/s10368-017-0390-6
Kasuga, H. (2004) ‘Saving-investment correlations in developing countries’, Economics Letters, 83 (3), pp. 371–376.
Ketenci, N. (2012) ‘The Feldstein — Horioka Puzzle and structural breaks: Evidence from EU members’, Economic Modelling, 29, pp. 262–270.
Ketenci, N. (2013) ‘The Feldstein — Horioka Puzzle in groupings of OECD members: A panel approach’, Research in Economics, 67 (1), pp. 76–87.
Kim, S., Kim, S. and Choi, Y. (2017) ‘International capital mobility: regional versus global perspective’, Review of World Economics, 154 (1), pp. 157–176.
Kim, H. (2001) ‘The saving-investment correlation puzzle is still a puzzle’, Journal of International Money and Finance, 20 (7), pp. 1017–1034.
Ko, J.-H. and Funashima, Y. (2019) ‘On the Sources of the Feldstein — Horioka Puzzle across Time and Frequencies’, Oxford Bulletin of Economics and Statistics, 81 (4), pp. 889–910.
Kollias, C., Mylonidis, N. and Paleologou, S.-M. (2008) ‘The Feldstein — Horioka Puzzle across EU members: Evidence from the ARDL bounds approach and panel data’, International Review of Economics and Finance, 17, pp. 380–387.
Kurichev, N. K. and Kuricheva, E. K. (2019) ‘Migration and Investment Activity of Residents of Russian Cities in the Housing Market of Moscow Agglomeration’, Regional Research of Russia, 9, pp. 213–224. (In Russian)
LeSage, J. and Pace, R. K. (2009) Introduction to Spatial Econometrics. CRC Press.
Mamingi, N. (1997) ‘Saving-investment correlations and capital mobility: The experience of developing countries’, Journal of Policy Modeling, 19 (6), pp. 605–626.
Moran, P. A. (1950) ‘Notes on continuous stochastic phenomena’, Biometrika, 37 (1/2), pp. 17–23.
Obstfeld, M. (1985) ‘Capital Mobility in the World Economy: Theory and Measurement Maurice Obstfeld’, NBER Working Paper No. 1692.
Singh, T. (2019) ‘Saving-investment correlations and the mobility of capital in the OECD countries: New evidence from cointegration breakdown tests’, The International Trade Journal, 33 (5), pp. 385–415.
Sinn, S. (1992) ‘Saving-Investment Correlations and Capital Mobility: On the Evidence from Annual Data’, Economic Journal, 102 (414), pp. 1162–1170.
Summers, L. (1988) Tax policy and international competitiveness, in J. Frenkel, ed., International aspects of fiscal policies (Chicago University Press, Chicago, IL), pp. 349–386.
Vega, S. H. and Elhorst, J. P. (2013) ‘On spatial econometric models, spillover effects, and W’, in 53rd ERSA Congress, Palermo, Italy.
Wang, S. (2016) ‘China’s interregional capital mobility: A spatial econometric estimation’, China Economic Review, 41, pp. 114–128.
Zubarev, A. and Trunin, P. (2013) ‘Feldstein — Horioka Puzzle: Modern Aspects‘, Economic Policy, 2, pp. 54–73. (In Russian)
Downloads
Published
How to Cite
Issue
Section
License
Articles of the St Petersburg University Journal of Economic Studies are open access distributed under the terms of the License Agreement with Saint Petersburg State University, which permits to the authors unrestricted distribution and self-archiving free of charge.
