Is the Financial Development and Economic Growth Relationship Nonlinear?

Elena Ketteni, Theofanis P. Mamuneas (), Thanasis Stengos () and Andreas Savvides
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Elena Ketteni: University of Cyprus
Andreas Savvides: Oklahoma State University

No 501, Working Papers from University of Guelph, Department of Economics

Abstract: We study the relationship between financial development and economic growth to explore possible nonlinearities. We use the same data set as previous researchers but employ nonparametric estimation techniques. We find that, in contrast to recent research, the finance-growth relationship is linear when the previously documented nonlinearity between initial per capita income and human capital, on the one hand, and economic growth, on the other, is taken into account. When these nonlinearities are ignored, the finance-growth relationship appears nonlinear.

Keywords: Cross Country Growth Regressions; Financial Development; Semiparametric Additive Linear Model. (search for similar items in EconPapers)
JEL-codes: O16 O47 G28 (search for similar items in EconPapers)
Date: 2005
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Journal Article: Is the Financial Development and Economic Growth Relationship Nonlinear? (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:gue:guelph:2005-1

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