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Title:Savings and investment correlations in response to monetary policy shocks: New insights into the Feldstein-Horioka puzzle? PDF Logo
Authors:Schmidt, Caroline
Issue Date:2006
Series/Report no.:Arbeitspapiere // Konjunkturforschungsstelle, Eidgenössische Technische Hochschule Zürich 144
Abstract:In this paper, it is argued that the observed high positive correlation between national savings and investment which is found in the data can in part be explained by shocks to monetary policy. This hypothesis, which is established by reviewing some empirical findings, is tested in a two-country DSGE-model framework in the tradition of the New Open Economy Macroeconomics. The simulation results obtained support the idea that shocks to monetary policy might contribute to the explanation of the Feldstein-Horioka puzzle.
Subjects:Savings Investment Correlations
Monetary Policy Shocks
Feldstein-Horioka Puzzle
Local-currency pricing
JEL:E2
E52
F32
Persistent Identifier of the first edition:doi:10.3929/ethz-a-005277762
Document Type:Working Paper
Appears in Collections:KOF Working Papers, KOF Konjunkturforschungsstelle, ETH Zürich

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