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Assessing the role of financial deepening in business cycles: the experience of the United Arab Emirates

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  • Ali Darrat
  • Salah Abosedra
  • Hassan Aly
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    Abstract

    The relation between financial market development and the severity of business cycles in the economy of the United Arab Emirates is investigated. No evidence is found of a dampening effect from financial deepening on cyclical fluctuations in the short-run, but strong effects in the long-run. These results extend recent findings on the financial development/economic growth nexus and imply that growth volatility reductions expected from further financial developments are slow to materialize especially in countries with relatively large and well-functioning financial sectors.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

    Volume (Year): 15 (2005)
    Issue (Month): 7 ()
    Pages: 447-453

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    Handle: RePEc:taf:apfiec:v:15:y:2005:i:7:p:447-453

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    Cited by:
    1. Jones Danquah & Daniel Sarpong & Ari Pappinen, 2013. "Causal relationships between African mahoganies exports and deforestation in Ghana: policy implications," Environment, Development and Sustainability, Springer, vol. 15(1), pages 51-66, February.
    2. Muhammad Shahbaz & Muhammad Shahbaz Shabbir & Muhammad Sabihuddin Butt, 2013. "Effect of financial development on agricultural growth in Pakistan: New extensions from bounds test to level relationships and Granger causality tests," International Journal of Social Economics, Emerald Group Publishing, vol. 40(8), pages 707-728, June.
    3. Chaiechi, Taha, 2012. "Financial development shocks and contemporaneous feedback effect on key macroeconomic indicators: A post Keynesian time series analysis," Economic Modelling, Elsevier, vol. 29(2), pages 487-501.
    4. Tiago Pinheiro & Francisco Rivadeneyra & Marc Teignier, 2013. "Financial Development and the Volatility of Income," Working Papers 13-4, Bank of Canada.

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