ARDL Modelling Approach to Testing the Financial Liberalisation Hypothesis
AbstractIt is a stylised fact that financial "repression" retards economic growth. Hence, financial liberalisation is advocated to remove the stranglehold on the economy. Financial liberalisation policy argues that deregulation of interest rate would result into a higher real interest rate which would lead to increased savings, increased investment and achieve efficiency in financial resource allocation. Past studies have reported inconclusive results regarding the interest rate effects on savings and investment. This paper examines the financial liberalisation hypothesis by employing autoregressive distributed lag (ARDL) modelling approach on Nepalese data. Results show that the real interest rate affects both savings and investment positively.
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Bibliographic InfoPaper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp05-15.
Length: 30 pages
Date of creation: 2005
Date of revision:
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Financial Liberalisation; Interest Rate Effects; Unit Roots; Cointegration; ARDL Modelling;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-09 (All new papers)
- NEP-FMK-2005-11-09 (Financial Markets)
- NEP-IFN-2005-11-09 (International Finance)
- NEP-MAC-2005-11-09 (Macroeconomics)
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