Revisiting the Feldstein-Horioka Hypothesis of savings, investment and capital mobility: evidence from 27 EU countries

Abstract

This paper is an attempt to estimate the magnitude of integration for capital mobility among EU economies for the time period 1991-2009. It has been empirically observed that there is strong evidence in favor of higher degree of capital mobility for many EU countries, especially at euro currency period and in euro zone. We conclude that short run and long run capital mobility test based on Feldstein-Horioka (F-H) estimation method is likely to provide a measure of EU capital mobility.