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- Title
Thresholds in the Finance-Growth Nexus: A Cross-Country Analysis.
- Authors
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.
- Subjects
PUBLIC finance; PRICE inflation; ECONOMIC development; INTERNATIONAL trade; DEVELOPED countries; DEVELOPING countries
- Publication
World Bank Economic Review, 2011, Vol 25, Issue 2, p278
- ISSN
0258-6770
- Publication type
Article
- DOI
10.1093/wber/lhr011