50 Years of Capital Mobility in the Eurozone: Breaking the Feldstein-Horioka Puzzle

Abstract This paper assesses capital mobility for the Eurozone countries by studying long-run relationship between domestic investment and savings period 1970-2019. Our main goal is to analyze impact of economic events on during this period. We apply cointegration methodology in a setting that allows us identify endogenous breaks saving-investment relationship. Precisely, coincide with relevant events. find downward trend retention since 70s so-called “core countries”, whereas not so evident peripheral, where financial sovereign crises have had more substantial impact. In addition, our analysis captures other events: Exchange Rate Mechanism (ERM) crisis, German reunification, European assistance program, post-crisis results also indicate original euro design some flaws remain unsolved.