Testing Feldstein-Horioka Hypothesis for Turkish Economy: Application of ARDL Model


ESEN E., YILDIRIM S., KOSTAKOĞLU S. F.

ESKISEHIR OSMANGAZI UNIVERSITESI IIBF DERGISI-ESKISEHIR OSMANGAZI UNIVERSITY JOURNAL OF ECONOMICS AND ADMINISTRATIVE SCIENCES, vol.7, no.1, pp.251-267, 2012 (ESCI) identifier

Abstract

The presence of a relation between saving and investment is paramount to the determination of economic policies. Feldstein-Horioka (1980) stated that the relationship between saving and investment depends on the degree of international capital mobility. If the capital mobility is high then the relation between saving and investment is strong. However, in the case of restricted capital mobility the relation falters or ceases to exist altogether. In this study the Feldstein-Horioka hypothesis is tested for Turkey using ARDL model. The empirical findings support the hypothesis for the Turkey.