 Economic growth, volatility and their interaction: What’s the role of finance?Sergio H.R. da Silva, Benjamin Tabak, Daniel Cajueiro and Dimas Fazio Economic Systems, 2017, vol. 41, issue 3, 433-444 Abstract: This paper examines the relation between financial depth and the interaction of economic growth and its volatility. We use a sample of 52 countries for the period 1980–2011, and our main finding is that, at moderate levels of financial depth, further deepening increases the ratio of average growth to volatility; however, as financial depth increases, this relation reverts, and the rise in volatility overcomes that of economic growth. This result is obtained both in the medium and long run; however, the peak of the relation seems to be lower in the medium run (around 40%–55% of domestic credit/GDP) than in the long run (around 75%–99%). This suggests that increasing the level of domestic credit may intensify relative volatility in the medium term, but still raise relative long-term growth before the long-run threshold is achieved. Keywords: Financial development; Growth; Volatility; Non-linearity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:41:y:2017:i:3:p:433-444 DOI: 10.1016/j.ecosys.2016.10.008 Access Statistics for this article Economic Systems is currently edited by R. Frensch More articles in Economic Systems from Elsevier Contact information at EDIRC. |
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