The Feldstein-Horioka Paradox – Evidence for Colombia during 1925-2011

• Penagos Gómez, Óscar ^[1] ; Rojas Serrano, Héctor ^[1] ; Campo Robledo, Jacobo ^[1]
  1. [1] Universidad Católica de Colombia

     Universidad Católica de Colombia

     Colombia

     
• Localización: Ecos de Economía, ISSN-e 1657-4206, Vol. 19, Nº. 40, 2015, págs. 4-24
• Idioma: inglés
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• Resumen

  • This paper examines the relationship between national investment and saving in Colombia during the period 1925-2011.  Consistent with Cardenas and Escobar (1998), an Error Correction Model is used to examine short and long run effects.  The results provide evidence that investment and saving are co-integrated during the study period. The results for the co-integration vector, with and without structural breaks, indicate that capital mobility was low, which is consistent with the Feldstein – Horioka [1980] paradox.  The results imply that increases in domestic saving rates reduce the mobility of financial capital in Colombia.