Kunieda, Takuma (2008): Financial Development and Volatility of Growth Rates: New Evidence.
Download (220kB) | Preview
This paper examines the effect of financial development on growth volatility with the dynamic panel data analysis. It demonstrates empirically that financial development has a hump-shaped effect on growth volatility. In early stages of financial development, growth rates are less volatile. As the financial sector develops, an economy is highly volatile. However, as the financial sector matures and the financial market approaches a perfect one, the economy becomes less volatile once again.
|Item Type:||MPRA Paper|
|Original Title:||Financial Development and Volatility of Growth Rates: New Evidence|
|Keywords:||Growth Volatility; Financial Development; Dynamic Panel Models|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
|Depositing User:||Takuma Kunieda|
|Date Deposited:||03. Nov 2008 10:55|
|Last Modified:||16. Feb 2013 06:43|
Aghion, P., A. Banerjee, and T. Piketty, 1999, Dualism and Macroeconomic Volatility, Quarterly Journal of Economics 114, 1359-1397.
Arellano, M. and S. Bond, 1991, Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations, Review of Economic Studies 58, 277-297.
Arellano, M. and O. Bover, 1995, Another Look at the Instrumental-Variable Estimation of Error-Components Models, Journal of Econometrics 68, 29-52.
Beck, T. and R. Levine, 2004, Stock Markets, Banks, and Growth: Panel Evidence, Journal of Banking and Finance, 423-442.
Beck, T., M. Lundberg, and G. Majnoni, 2006, Financial Intermediary Development and Growth Volatility: Do Intermediaries Dampen or Magnify Shocks?, Journal of International Money and Finance 25, 1146-1167.
Blundell, R. and S. Bond, 1998, Initial Conditions and Moment Restrictions in Dynamic Panel Data Models, Journal of Econometrics 87, 115-143.
Chinn, M.D. and H. Ito, 2006, What Matters for Financial Development? Capital Controls, Institutions, and Interactions, Journal of Development Economics 81, 163-192.
Chinn, M.D., and H. Ito, 2007, A New Measure of Financial Openness, Department of Economics, University of Wisconsin, mimeo.
Denizer, C., M.F. Iyigun, and A.L. Owen, 2002, Finance and Macroeconomic Volatility, Contributions to Macroeconomics 2, Article 7.
Easterly, W., R. Islam, and J.E. Stiglitz, 2000, Shaken and Stirred: Explaining Growth Volatility, In: Annual World Bank Conference on Development Economics 2000, 191-211.
Galor, O., 2005, From Stagnation to Growth: Unified Growth Theory, in Handbook of Economic Growth, Vol IA, eds. by Aghion, P. and S. N. Durlauf, Elsevier North-Holland, Amsterdam, The Netherlands.
Galor, O., and D.N. Weil, 2000, Population, Technology and Growth: From the Malthusian Regime to the Demographic Transition, American Economic Review 110, 806-828.
Kiyotaki, N. and J. Moore, 1997, Credit Cycles, Journal of Political Economy 105, 211-248.
Levine, R., N. Loayza, and T. Beck, 1999, A New Database on Financial Development and Structure, Policy Research Working Paper: No. WPS 2146, The World Bank.
Levine, R., N. Loayza, and T. Beck, 2000, Financial Intermediation and Growth: Causality and Causes, Journal of Monetary Economics 46, 31-77.
Raddatz, C., 2006, Liquidity Needs and Vulnerability to Financial Underdevelopment, Journal of Financial Economics 80, 677-722.