This paper investigates the experience of developing countries with financial liberalization, focusing on the gap between theory and evidence. While the former suggests positive effects on economic development, the latter pinpoints to significant destabilizing consequences. e argue that the main...

Authors in this article suggest that country specific institutional factors and policies are likely to influence the causal nature of the relationship between financial development and economic growth. Authors conduct cointegration and causality tests using time series data for twelve...

This paper re-examines the question of causality between financial development and economic growth. We argue that recent results obtained from cross-section country studies are not able to address this issue satisfactorily. Drawing on the distinction between `bank- based' and...

We contribute to the debate on whether the U.S. large federal budget deficits are sustainable in the long run. We model the U.S. government deficit per capita as a threshold autoregressive process. We find evidence that the U.S. budget deficit is sustainable in the long run and that economic...

Using data from 72 countries for the period 1978-2000, we find that financial development has larger effects on GDP per capita when the financial system is embedded within a sound institutional framework. Moreover, we find that financial development is most potent in middle-income countries,...

This paper empirically investigates the convergence hypothesis in terms of GDP per capita (or worker) and total factor productivity for both Northern and Southern Cyprus economies over the period 1977-2000. We test whether both economies during this period converge to a common steady state...

[This paper is no longer available. It has been replaced by paper 07/5: Financial Development, Openness and Institutions: Evidence from Panel Data.] Using cross-country and dynamic panel data techniques on 43 developing countries during 1980 – 2000, we provide evidence which suggests that...

This paper examines whether a monetary policy tightening (i.e., an increase in the domestic interest rate) was successful in defending the exchange rate from speculative pressures during the Asian financial crisis. We estimate a bivariate VECM for four Asian countries, and improve upon existing...