SAVING-INVESTMENT ASSOCIATIONS AND CAPITAL MOBILITY - ON THE EVIDENCEFROM JAPANESE REGIONAL DATA

The paper examines the magnitude of the 'saving retention coefficient, ' b, in a setting of known near perfect capital mobility, Japanese reg ions. First, we find that on total regional saving and investment rate data, inclusive of regional government saving and investment, the est imate of b is negative. This negative relationship in the total rates across Japanese regions appears to arise from the strong negative asso ciation in the government saving and. Investment rates. Second, on pri vate regional investment and saving rate data, b is insignificantly di fferent from zero. This is evidence consistent with the hypothesis of Feldstein and Horioka. (Economic Journal, 1980) that in a financially integrated economy b would be close to zero.