Impact of national financial regulation on macroeconomic and fiscal performance after the 2007 financial shock: Econometric analyses based on cross-country data

Tobias Hagen

No 2013-26, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Using cross-country data, this paper estimates the impact of the 2007 financial shock on countries' macroeconomic developments conditional on national financial regulations before the crisis. For this purpose, the financial reform index developed by Abiad et al. (A New Database of Financial Reforms, 2008) is used. The econometric analyses indicate that countries with more deregulated financial markets experienced deeper recessions, stronger employment losses, and larger government budget deficits. Against the background of the ongoing global crisis and the results of other studies, the usefulness of liberalized financial markets for macroeconomic stability and economic development should be rigorously reconsidered.

Keywords: financial crisis; financial regulation; Great Recession; robust regression; semiparametric regression (search for similar items in EconPapers)
JEL-codes: C21 E32 G18 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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https://www.econstor.eu/bitstream/10419/71280/1/741280205.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201326

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