Stock Market Liquidity and Economic Growth: A Critical Appraisal of the Levine/Zervos Model
AbstractLevine and Zervos (1998) presented cross-country econometric evidence showing that, in a sample of 47 countries, stock market liquidity contributed a significant positive influence on GDP growth between 1976-93. We show that the Levine-Zervos results are not robust to alternative specifications because of the incomplete manner in which they control for outliers in their data. We show that when one properly controls for outliers, stock market liquidity no longer exerts any statistically observable influence on GDP growth.
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Bibliographic InfoPaper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp47.
Date of creation: 2002
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-12-02 (All new papers)
- NEP-DEV-2002-12-02 (Development)
- NEP-FIN-2002-12-02 (Finance)
- NEP-PKE-2002-12-02 (Post Keynesian Economics)
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"Stock Markets, Banks, and Economic Growth,"
American Economic Review,
American Economic Association, vol. 88(3), pages 537-58, June.
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- Roger Koenker & Kevin F. Hallock, 2001.
Journal of Economic Perspectives,
American Economic Association, vol. 15(4), pages 143-156, Fall.
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