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Inflation and Financial Development: Evidence from Brazil

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  • Bittencourt, Manoel

Abstract

We examine the impact of inflation on financial development in Brazil and the data available permit us to cover the period between 1985 and 2002. The results ? based initially on time-series and then on panel time-series data and analysis, and robust for different estimators and financial development measures ? suggest that inflation presented deleterious effects on financial development at the time. The main implication of the results is that poor macroeconomic performance has detrimental effects to financial development, a variable that is important for affecting, for example, economic growth and income inequality. Therefore, low and stable inflation, and all that it encompasses, is a necessary first step to achieve a deeper and more active financial sector with all its attached benefits.

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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number RP2008/14.

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Length: 26 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:unu:wpaper:rp2008-14

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Keywords: financial development; inflation; Brazil;

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Citations

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Cited by:
  1. Bittencourt, Manoel & Gupta, Rangan & Stander, Lardo, 2014. "Tax evasion, financial development and inflation: Theory and empirical evidence," Journal of Banking & Finance, Elsevier, vol. 41(C), pages 194-208.
  2. Bittencourt, Manoel, 2011. "Financial Development and Economic Growth in Latin America: Is Schumpeter Right?," Proceedings of the German Development Economics Conference, Berlin 2011 13, Verein für Socialpolitik, Research Committee Development Economics.
  3. Satti, Saqlain Latif & Shahbaz, Muhammad & Mujahid, Nooreen & Ali, Amjad, 2013. "Impact of Financial Development and Globalization on Inflation: The Role of Remittance and Economic Growth in Bangladesh," MPRA Paper 51675, University Library of Munich, Germany, revised 21 Nov 2013.
  4. Matthias Hartmann & Helmut Herwartz & Yabibal M. Walle, 2012. "Where enterprise leads, finance follows. In-sample and out-of-sample evidence on the causal relation between finance and growth," Economics Bulletin, AccessEcon, vol. 32(1), pages 871-882.
  5. Abu N. M., Wahid & Muhammad, Shahbaz & Pervez, Azeem, 2011. "Inflation and financial sector correlation: the case of Bangladesh," MPRA Paper 32935, University Library of Munich, Germany, revised 20 Aug 2011.
  6. Manoel Bittencourt, 2011. "Is Copacabana Still the ‘Little Princess of the Sea’?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(1), pages 11-16, 03.
  7. Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Schumpeter is Right!," Working Papers 201014, University of Pretoria, Department of Economics.

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