What does the saving-investment (SI) relation really measure and how should the (SI)
relation be measured? These are two of the most discussed issues triggered by the
so called Feldstein-Horioka puzzle. Based on panel data we introduce a new variant
of functional coefficient models that allow to separate long and short to medium
run parameter dependence. We apply the latter to uncover the determinants of the
SI relation. Macroeconomic state variables such as openness, the age dependency ratio,
government current and consumption expenditures are found to affect the SI relation
significantly in the long run.