Thresholds in the Finance-Growth Nexus : A Cross-Country Analysis

Yilmazkuday, Hakan

doi:10.1093/wber/lhr011

Publication: Thresholds in the Finance-Growth Nexus : A Cross-Country Analysis

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Date

2011-05-31

ISSN

1564-698X

Published

2011-05-31

Author(s)

Yilmazkuday, Hakan

Abstract

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.

Citation

“Yilmazkuday, Hakan. 2011. Thresholds in the Finance-Growth Nexus : A Cross-Country Analysis. World Bank Economic Review. © World Bank. http://hdl.handle.net/10986/13474 License: CC BY-NC-ND 3.0 IGO.”