Financial Liberalisation and Domestic Saving in Economic Development.An Empirical Test for Six Countries

Shigeyuki Abe, Maxwel Fry, Byoung Min, PAiROJ Vongvipanond and Teh Yu
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Shigeyuki Abe: Department of Economics, University of Hawaii.
Maxwel Fry: Department of Economics, University of Hawaii.
Byoung Min: Department of Economics, University of Hawaii.
PAiROJ Vongvipanond: Department of Economics, University of Hawaii.
Teh Yu: Department of Economics, University of Hawaii.

The Pakistan Development Review, 1977, vol. 16, issue 3, 298-308

Abstract: pment in the process of economic growth, a convincing theoretical framework was lacking until the recent publications of McKinnon [19] and Shaw [25]. Indeed, neoclassical growth theories provide, in the main, a negative role to the monetary process. Here, a reduction rather than an increase in real returns on financial wealth stimulates saving and investment. McKinnon and Shaw both take direct issue with the neoclassical proposition, showing that crucial assumptions in this paradigm are erroneous in the context of less developed countries. McKinnon produces an alternative model in which real money balances are complements rather than substitutes to tangible investment. Shaw rejects neoclassical growth models in favour of the debtintermediation view which he himself pioneered in the 1950's.

Date: 1977
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