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Capital mobility and growth: Evidence from Greece

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  • Pappas, Anastasios

Abstract

A standard argument of the advocates of unrestricted capital flows is that they boost a small country’s growth by increasing the efficiency of the allocated capital. In this paper I examine the nexus between capital flows and real growth for the Greek economy during the period 1980-2000. Such a positive link is not confirmed by the analysis either for total capital flows or flows concerning exclusively Foreign Direct Investments which are considered as stable and in general valuable. These results are robust to both of estimation methods employed (Granger Causality test and OLS regressions) and pass stringent extreme bound analysis criteria (EBA). The findings of this paper support the notion that capital account liberalization is not panacea for the economic development of small open economies.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29105.

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Date of creation: 2010
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Publication status: Published in MIBES Transactions International Journal 1.4(2010): pp. 80-95
Handle: RePEc:pra:mprapa:29105

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Keywords: Growth; capital flows; FDI; Greece;

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  12. Panicos Demetriades & Siong Hook Law, 2004. "Finance, Institutions and Economic Growth," Discussion Papers in Economics 04/5, Department of Economics, University of Leicester.
  13. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
  14. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
  15. Bernhard Fischer & Helmut Reisen, 1992. "Towards Capital Account Convertibility," OECD Development Centre Policy Briefs 4, OECD Publishing.
  16. Arestis, Philip, et al, 2002. "The Impact of Financial Liberalization Policies on Financial Development: Evidence from Developing Economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 7(2), pages 109-21, April.
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