Dynamic Effects of Financial Openness on Economic Growth and Macroeconomic Uncertainty

Dong-Hyeon Kim, Shu-Chin Lin and Yu-Bo Suen

Emerging Markets Finance and Trade, 2012, vol. 48, issue 1, 25-54

Abstract: This paper examines the dynamic effects of financial integration and foreign direct investment (FDI) on economic growth and macroeconomic uncertainty. Using the pooled mean group autoregressive distributed lag approach to annual data over 1975-2007 for ninety developing countries, we find that financial integration contributes to faster economic growth and lower growth uncertainty in the long run. The evidence also shows considerable heterogeneity in the short run. In addition, we find that FDI impedes output growth but mitigates uncertainty in output and consumption growth in the long run. In the short run, FDI has an average negative effect on growth and negligible effect on growth uncertainty, but there are large cross-country differences in response to FDI integration.

Keywords: economic growth; financial openness; macroeconomic uncertainty; pooled mean group estimator (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://mesharpe.metapress.com/link.asp?target=contribution&id=T325620JV5K0826T (text/html)
Access to full text is restricted to subscribers.

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:mes:emfitr:v:48:y:2012:i:1:p:25-54

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().