Capital mobility in Greece before and after financial liberalization: A counter-argument

The note by Christopoulos re-examines the national savings—domestic investments correlation in Greece for the period 1960–2000. He applies the Johansen [Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 8, 231–254; Johansen, S. (1991). Estimation and hypothesis testing of cointegrating vectors in Gaussian vector autoregressive models. Econometrica, 59, 1551–1580] econometric technique, and fails to find evidence for cointegration as Pelagidis and Mastroyiannis [Pelagidis, T., & Mastroyiannis, T. (2003). The saving–investment correlation in Greece, 1960–1997: Implications for capital mobility. Journal of Policy Modeling, 25, 609–616] did using the Jansen and Schultze [Jansen, W. J., & Schultze, G. G. (1993). Theory-based measurement on the saving–investment correlation with an application to Norway (Discussion Paper 205). Konstanz: Universitat Konstanz] methodology. We argue that the results are different not only due to the alternative methodology used but also because of differences in the period considered as well as of the data sources. As far as the main policy conclusions are concerned, we believe that even if one finds relatively stronger evidence of capital mobility, this cannot refute the desirability of encouraging national savings.