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Capital Market and Business Cycle Volatility

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  • Tharavanij, Piyapas

Abstract

This paper investigates cross-country evidence on how capital market affects business cycle volatility. In contrast to the large and growing literature on the impact of finance and growth, empirical work on the relationship between finance and volatility has been relatively scarce. Theoretically, more developed capital market should lead to lower macroeconomic volatility. The major finding is that countries with more developed capital market have smoother economic fluctuations. Results are generated using panel estimation technique with panel data from 44 countries covering the years 1975 through 2004.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4952.

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Date of creation: 09 Sep 2007
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Handle: RePEc:pra:mprapa:4952

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Keywords: business cycle; capital market; financial development; financial structure; panel data; market-based; bank-based;

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Citations

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Cited by:
  1. Christev, Atanas & Mélitz, Jacques, 2010. "EMU, EU, capital market integration and consumption smoothing," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7776, C.E.P.R. Discussion Papers.
  2. Atanas Christev & Jacques Melitz, 2011. "EMU, EU, Market Integration and Consumption Smoothing," Working Papers 2011-21, CEPII research center.
  3. Piyapas Tharavanij, 2007. "Capital Market, Frequency Of Recession, And Fraction Of Time The Economy In Recession," Development Research Unit Working Paper Series, Monash University, Department of Economics 34-07, Monash University, Department of Economics.
  4. Mallick, Debdulal, 2009. "Financial Development, Shocks, and Growth Volatility," MPRA Paper 17799, University Library of Munich, Germany.
  5. Piyapas Tharavanij, 2007. "Capital Market, Severity Of Business Cycle, And Probability Of An Economic Downturn," Development Research Unit Working Paper Series, Monash University, Department of Economics 32-07, Monash University, Department of Economics.

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