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ISSN: 2247-6172; ISSN-L: 2247-6172 Review of Applied Socio- Economic Research (Volume 5, Issue 1/ 2013 ), pp. 42 URL: http://www.reaser.eu e-mail: editors@reaser.eu Tunisia (the correlation coefficient decreased from 0.8 to 0.58 while in Morocco remained constant (0.49-0.52). Model M (3) search to measure the effect of the inclusion of FDI. The introduction of this variable is irrelevant. On the one hand, these flows are a major source of financing of the economy, particularly investment that leads to a significant reduction in the retention coefficient of savings. In other words, FDI and domestic savings are the main sources of financing domestic investment, which reduces the strain of internal funding for these investments. This prediction is easily identifiable in the case of Tunisia, where FDI positively affect the rate of investment and at the same time strengthens the financial openness coefficient decrease (0.81 to 0.47). It should be noted that the impact on the investment rate is very low (0.02 and 0.04 for Tunisia to Morocco) reflecting the very small part of these financial flows in the economy of these countries. The role of worker remittances is detected in the model M (4). In the case of Tunisia, this variable negatively affects investment, meaning that these transfers are assigned mainly to the consumption, and the altruistic motive is the argument most likely to send the funds to Tunisia. In the case of Morocco, the retention coefficient remains unchanged and transfers act positively on the rate of investment, thus providing an additional source of investment financing and the reason for sending in this country is rather an opportunistic pattern of investment. The model M (5) is a model in which full grown we have introduced the most relevant variables in our analysis. Added to the trade openness, the trend, FDI and worker remittances, we reject foreign aid as a potential source of explanation of the degree of capital mobility. It follows from our estimates that transfers and subsidies are not significant. Consequently, the investment rate and the degree of openness are stimulated by economic liberalization and FDI flows. For these two variables Morocco stimulate investment level leaving unchanged the mobility of capital. 5. Conclusion The objective of this paper was to measure and compare the degree of capital mobility in Tunisia and Morocco during the period 1975-2010. We used the approach of Feldstein and Horioka [1980]. In order to separate the impact of temporary shocks affecting the economy in the short term from the long-term relationship between saving and domestic investment, we adopt a representation of the Error Correction Model using the procedure of Engel and Granger. This model allows us to estimate a correlation coefficient of short term representing the measurement of the degree of capital mobility in Tunisia and Morocco. This coefficient is close to 0.4 indicating that Morocco and Tunisia are considered as half-open countries over their capital account. In order to further develop our econometric macro econometric measurement of international capital mobility we precede to an extension of the basic model via an estimate of an augmented model in which we have introduced additional variables: trade openness, FDI, Worker Remittances and Foreign Aid. The results of the estimates show that these variables explain effectively the investment rate and especially the degree of financial openness. We conclude that the mobility of capital is stimulated mainly by the degree of economic openness and FDI. 6. References [1] Banerjee, A and Zanghieri, P. A New Look at the Feldstein-Horioka Puzzle using an Integrated Panel. CEPII Research Centre Working Papers. 2003. [2] Backus, D, Kehoe, P and Kydland. F. Dynamics of the Trade Balance and the Terms of Trade: The S-Curve. NBER Working Papers 4242. 1992. [3] Bayoumi, T. Saving Investment Correlation. IMF Staff Papers 37-2. 1992.
ISSN: 2247-6172; ISSN-L: 2247-6172 Review of Applied Socio- Economic Research (Volume 5, Issue 1/ 2013 ), pp. 43 URL: http://www.reaser.eu e-mail: editors@reaser.eu [4] Ben Slimane, S and Ben Tahar, M. A Macroeconometric Measurement of the Degre of Financial Integration in MENA Region . Economie Appliquée, tome LXII. 2009, (2): 139-158. [5] Coakley, J and Kulasi, F. Cointegration of Long Span Saving and Investment. Economics Letters. 2007, 54(1): 1-6. [6] Dooley,M, Franckel, F and Mathieson, D. Current Account Solvency and the Feldstein Horioka Puzzle. Economic Journal. 1987, (7): 632-640. [7] Feldstein, M and Horioka, C. Domestic Saving and International Capital Flows. Economic Journal. 1990, 90: 314-329. [8] Franckel, J. Measuring International Capital Mobility: a Review, American Economic Review. 1992, 82 (2): 197-202. [9] Jansen, W. Estimating Saving-Investment Correlations: Evidence for OECD Countries Based on an Error Correction Model. Journal of International Money and Finance. 1996, 5: 749-781. [10] Mamingi, N. Saving-investment Correlations and Capital Mobility in Developing Countries. World Bank, Policy Research Working Papers 1211, 1994. [11] Montiel, P. Capital Mobility in Developing Countries: Some Measurement Issues and Empirical Estimates. World Bank Economic Review. 1994, 8(3): 311-350. [12] Obstfeld,M and Kenneth R. The Six Major puzzles in International Macroeconomics: is there a Common cause. NBER Working Paper 777. 2000 [13] Özmen, E. Financial Development, Exchange Rate Regimes and the Feldstein-Horioka Puzzle: Evidence from the MENA Region, Applied Economics. 2007, 39(9): 1133-1138. [14] Schneider, B. Saving Investment Correlation and Capital Mobility in Developing Countries with Special Reference to India. Council of Research on International Economic Relation. 1999.
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