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The study uses data on 14 countries (Taylor, Citation1994) to investigate if the saving-retention coefficient varies with country size. A novel semiparametric smooth-coefficient approach of Koop and Tobias (Citation2005) is employed to make posterior inference via the Gibbs sampler algorithm. Empirical results show an overwhelming evidence in support of a positive (nonlinear) relationship between the saving-retention coefficient and country size.
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