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Finance and Macroeconomic Volatility

Author

Listed:
  • Denizer Cevdet A.

    (The World Bank)

  • Iyigun Murat F.

    (University of Colorado)

  • Owen Ann

    (Hamilton College)

Abstract

Countries with more developed financial sectors experience smaller fluctuations in real per capita output, consumption, and investment growth. However, the manner in which the financial sector develops matters. The relative importance of banks in the financial system is important in explaining GDP, consumption, and investment volatility, and the proportion of credit provided to the private sector explains the volatility of consumption and output. The main results are generated using fixed-effects estimation with panel data from 70 countries covering the years 1956 through 1998.

Suggested Citation

  • Denizer Cevdet A. & Iyigun Murat F. & Owen Ann, 2002. "Finance and Macroeconomic Volatility," The B.E. Journal of Macroeconomics, De Gruyter, vol. 2(1), pages 1-32, October.
    • Handle: RePEc:bpj:bejmac:v:contributions.2:y:2002:i:1:n:7
    DOI: 10.2202/1534-6005.1048
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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