Publication: Thresholds in the Finance-Growth Nexus : A Cross-Country Analysis
Thresholds of inflation, government size, trade openness, and per capita income for the finance-growth nexus are investigated using five-year averages of standard variables for 84 countries from 1965 to 2004. The results suggest that (i) high inflation crowds out positive effects of financial depth on long-run growth, (ii) small government sizes hurt the finance-growth nexus in low-income countries, while large government sizes hurt high-income countries, (iii) low levels of trade openness are sufficient for finance-growth nexus in high-income countries, but low-income countries need higher levels of trade openness for similar magnitudes of the finance-growth nexus, (iv) catch-up effects through the finance-growth nexus are higher for moderate per capita income levels.
“Yilmazkuday, Hakan. 2011. Thresholds in the Finance-Growth Nexus : A Cross-Country Analysis. World Bank Economic Review. © World Bank. http://openknowledge.worldbank.org/entities/publication/91847530-66ed-5691-b970-d267118e3665 License: CC BY-NC-ND 3.0 IGO.”
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