Fazio, Giorgio; MacDonald, Ronald; Melitz, Jacques - Department of Economics, Adam Smith Business School - 2007
explaining the so-called Feldstein-Horioka puzzle. Our approach has a number of novel features. First, we focus on the … interrelationship between trade costs, the trade account and the Feldstein-Horioka puzzle. Second, we use the gravity model to estimate … Rogoff hypothesis and we are also able to reconcile our results with the so-called home bias puzzle. …