01833cas a2200253 a 4500 AALejournalIMF007373 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451852356 1018-5941 BD-DhAAL BD-DhAAL Jansen, W. The Feldstein-Horioka Test of International Capital Mobility : Is it Feasible? / W. Jansen. Washington, D.C. : International Monetary Fund, 1996. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Feldstein and Horioka (1980) argued that the correlation of saving and investment in a cross-section of countries may provide a test of global capital mobility. This paper argues that neither the long-run nor the short-run correlation can serve as a reliable basis for such a test. The intertemporal budget constraint implies that each country's saving and investment should be cointegrated over time. Simulations show that the cross-section regressions used in the literature will produce correlations that strongly tend towards one, regardless of the degree of capital mobility. Although the short-run correlation is not affected by the intertemporal budget constraint, the empirical analysis shows it is primarily a country-specific business cycle fact. Mode of access: Internet Germany imf IMF Working Papers; Working Paper ; No. 1996/100 Full text available on IMF http://elibrary.imf.org/view/journals/001/1996/100/001.1996.issue-100-en.xml IMF e-Library