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Title:Is there an optimum level of financial activity? PDF Logo
Authors:Graff, Michael
Issue Date:2005
Series/Report no.:Arbeitspapiere // Konjunkturforschungsstelle, Eidgenössische Technische Hochschule Zürich 106
Abstract:This paper addresses the notion of an optimum level of financial activity that is contingent on a country's general level of development. Referring to threshold regressions and a bootstrap test for structural shift of the finance regressor in a growth equation, it is shown that countries gain less from a given level of financial activity, if the latter fails to keep up with or exceeds what would follow from a balanced expansion path. The paper contributes to the literature on the finance-growth nexus in providing empirical support for the notion of balanced financial development with a development specific optimum level of financial activity.
Subjects:Optimum financial activity
Bayesian statistics
bootstrapping
JEL:O11
P17
C11
Persistent Identifier of the first edition:doi:10.3929/ethz-a-005104837
Document Type:Working Paper
Appears in Collections:KOF Working Papers, KOF Konjunkturforschungsstelle, ETH Zürich

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