The Feldstein–Horioka Hypothesis in Türkiye: Evidence from the Quantile-on-Quantile Regression Approach
DOI:
https://doi.org/10.63556/tisej.2026.1977Keywords:
Nonlinear Relationship, Saving, Investment, Feldstein-Horioka Hypothesis, Quantile-on-Quantile RegressionAbstract
This study examines the relationship between saving and investment rates in Türkiye over the period 1960-2024 within the framework of the Feldstein-Horioka (1980) hypothesis. To investigate whether the saving-investment relationship operates uniformly across different regimes, the quantile-on-quantile regression (QQR) approach developed by Sim and Zhou (2015) is employed. The findings indicate that the relationship varies across different regions of the joint distribution of saving and investment. The strongest positive coefficients are concentrated in the middle saving and medium-to-high investment quantiles, whereas the coefficients become smaller and, in some cases, turn negative in the lower investment and higher saving quantiles. These results suggest that, although the Feldstein-Horioka hypothesis is supported in Türkiye for the middle saving and medium-to-high investment quantiles, it loses explanatory power in the lower investment and higher saving quantiles. Accordingly, increases in the saving rate do not exert a uniform effect on the investment rate across the entire distribution. Hence, evaluating the saving-investment relationship using a single average coefficient fails to capture its full distributional pattern. From the perspective of the Feldstein-Horioka hypothesis, the evidence neither supports a uniformly strong saving-investment linkage nor points to a complete decoupling between the two variables in Türkiye. Instead, the effect of saving on investment differs across economic regimes, implying a multi-layered relationship. The main contribution of this study is to identify where the saving-investment relationship strengthens, weakens, and changes sign, thereby providing a distribution-based perspective on Türkiye’s saving-driven investment pattern.
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