Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146430
Authors: 
Cavallo, Eduardo A.
Pedemonte, Mathieu
Year of Publication: 
2015
Series/Report no.: 
IDB Working Paper Series IDB-WP-617
Abstract: 
Using panel co-integration techniques and a comprehensive dataset covering the period 1980-2013, this paper finds a positive and significant correlation between national saving and domestic investment rates in Latin America and the Caribbean (LAC). The estimated correlation is approximately 0.39; i.e., for every 1 percentage point of GDP increase in national saving, domestic investment increases by 0.39 percentage points on average. There are however, three nuances to the headline result: i) the estimated correlation has been declining over time; ii) the regional average hides a large degree of intra-regional heterogeneity; and iii) the estimated coefficient is largest amongst the biggest economies in the region. It is concluded that low national saving rates remain a binding constraint for capital accumulation in LAC.
Subjects: 
Saving
Investment
Feldstein-Horioka puzzle
Panel cointegration
JEL: 
C23
E2
F36
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by-nc-nd/3.0/igo/legalcode
Document Type: 
Working Paper

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