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

Tobias Hagen

No 2, Working Paper Series from Frankfurt University of Applied Sciences, Faculty of Business and Law

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. (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; Semi-Parametric Regression (search for similar items in EconPapers)
JEL-codes: E32 G18 C21 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fhfwps:02

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