The growth effects of financial openness and exchange rates

Cesar Rodriguez

International Review of Economics & Finance, 2017, vol. 48, issue C, 492-512

Abstract: This study examines the role of financial openness and international financial integration when choosing an exchange rate regime where the objective is to maximize productivity growth. The discussion begins with a simple generalization of a framework with credit constraints and concludes that the negative effects of exchange rate volatility on productivity growth are reduced the more financially integrated into the international capital flows a country is. Second, an empirical analysis of productivity growth provides thresholds and addresses potential endogeneity problems. Robust and significant results find that a high degree of financial openness can mitigate the negative effect of exchange rate flexibility on growth.

Keywords: Growth; Exchange rate regime; Financial openness; International financial integration (search for similar items in EconPapers)
JEL-codes: F33 F43 O40 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056016303835
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:48:y:2017:i:c:p:492-512

DOI: 10.1016/j.iref.2016.12.015

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().