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Explaining The Saving-Investment Relationship With Threshold Effects, Unro Lee
Explaining The Saving-Investment Relationship With Threshold Effects, Unro Lee
Eberhardt School of Business Faculty Articles
There have been many attempts to explain the unreasonably high correlation between domestic saving and investment rates. The threshold testing procedure developed by Hansen (1999) provides a framework for testing the effects of key variables relating to capital mobility in conjunction with the saving- investment relationship. Ho (2003) first applied this method to the saving-investment puzzle controlling for thresholds in country size. Extending this model, this paper reports a number of significant thresholds effects for country- size, trade and financial openness measures, age dependency ratios and trade balances. After controlling for threshold effects the relationship between savings and investment is …
The Impact Of Inflation Targeting Regime On The Relationship Between Stock Returns And Inflation: International Evidence, Unro Lee
Eberhardt School of Business Faculty Articles
Twenty six industrialized and emerging countries have adopted inflation targeting monetary policy since 1990 to combat persistently high inflation rate. This policy accords either the government and/or the central bank the authority to assign an explicit numerical target for inflation rate and implement an appropriate monetary policy to achieve its goal. This study investigates whether the adoption of inflation targeting strategy has affected the relationship between stock returns and inflation rate. Specifically, this study tests a hypothesis that, in an economy where inflation targeting has been adopted as a new monetary policy strategy, real stock returns should be sensitive to …