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.

Bibliographic Details

Main Author:	Yilmazkuday, Hakan
Format:	Journal Article biblioteca
Language:	en_US
Published:	World Bank 2011-05-31
Subjects:	diminishing returns, disinflation, Economic growth, economic performance, financial crisis, GDP, growth rate, growth theories, income levels, industrialization, inflation, inflation rate, inflation rates, M1, M3, per capita income, positive effects, property rights, regression analysis, reserve requirements,
Online Access:	http://hdl.handle.net/10986/13475
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