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Kapopoulos, P., Paleologos, J. The Saving Retention Coefficient After the Advent of Euro. Credit and Capital Markets – Kredit und Kapital, 37(4), 465-478. https://doi.org/10.3790/ccm.37.4.465
Kapopoulos, Panayotis and Paleologos, John "The Saving Retention Coefficient After the Advent of Euro" Credit and Capital Markets – Kredit und Kapital 37.4, 2004, 465-478. https://doi.org/10.3790/ccm.37.4.465
Kapopoulos, Panayotis/Paleologos, John (2004): The Saving Retention Coefficient After the Advent of Euro, in: Credit and Capital Markets – Kredit und Kapital, vol. 37, iss. 4, 465-478, [online] https://doi.org/10.3790/ccm.37.4.465
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The Saving Retention Coefficient After the Advent of Euro

Kapopoulos, Panayotis | Paleologos, John

Credit and Capital Markets – Kredit und Kapital, Vol. 37 (2004), Iss. 4 : pp. 465–478

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.37.4.465
Language
Multiple languages
Pages
14

Author Details

Panayotis Kapopoulos, Athens

John Paleologos, Piraeus

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Abstract

The Saving Retention Coefficient After the Advent of Euro

The introduction of the euro marks a milestone in the process of European financial market integration. Capital mobility is helpful to cope with the loss of fiscal adjustment instruments in EMU. High capital mobility in the sense of Feldstein and Horioka can limit the negative consequences of shocks affecting the saving capacity of an economy in the Euro zone. In other words, if capital mobility is high, a country’s growth prospect will not be constrained by its ability to save. This paper empirically examines the magnitude of the saving retention coefficient in a setting of an institutionally targeted near-perfect capital mobility and capital market integration, Euro Area countries. We also try to clarify whether the adoption of the euro and the previously completed financial liberalisation has changed the slope of saving-investment association. For this purpose, the Feldstein/ Horioka approach is extended and updated. We find that the savings retention coefficient is relatively low for the whole EMS period but significantly different from zero. Also, the empirical findings support a new puzzle. Domestic saving and investment within EMU is less correlated than they were before the advent of the euro. This result does not support the Frankel’s (1992) proposition that the correlation observed between savings and investment is partly due to a non-zero currency premium. However, this result could be considered as preliminary, given the short sample size after the advent of euro. (F32, E22, G15)

Table of Contents

Section Title Page Action Price
Panayotis Kapopoulos/John Paleologos: The Saving Retention Coefficient\rAfter the Advent of Euro 465
I. Introduction 465
II. What does the Saving Retention Coefficient Really Tell us? 467
III. Research Strategy and Data 470
IV. Empirical Results 472
V. Conclusions 474
References 475
Summary: The Saving Retention Coefficient After the Advent of Euro 477
Zusammenfassung: Der Sparkoeffizient nach der Einführung des Euro 477
Résumé: Le coefficient de rétention d'épargne après l'introduction de l'Euro 478

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