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Two to tangle: Financial development, political instability and economic growth in Argentina

  • Campos, Nauro F.
  • Karanasos, Menelaos G.
  • Tan, Bin

This paper studies the impact of financial liberalization on economic growth. It contributes to this literature by using an innovative econometric methodology and a unique data set of historical series. It presents power ARCH estimates for Argentina for the period from 1896 to 2000. The main results show that the long-run effect of financial liberalization on economic growth is positive while the short-run effect is negative, albeit substantially smaller. Interestingly, we find that financial development affects growth only directly, that is, not through growth volatility.

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Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 36 (2012)
Issue (Month): 1 ()
Pages: 290-304

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Handle: RePEc:eee:jbfina:v:36:y:2012:i:1:p:290-304
Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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  1. Durlauf, Steven N. & Johnson, Paul A. & Temple, Jonathan R.W., 2005. "Growth Econometrics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 8, pages 555-677 Elsevier.
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  8. Campos, Nauro F, 2000. "Who is Afraid of Political Instability?," CEPR Discussion Papers 2555, C.E.P.R. Discussion Papers.
  9. Campos, Nauro F. & Karanasos, Menelaos G., 2008. "Growth, volatility and political instability: Non-linear time-series evidence for Argentina, 1896-2000," Economics Letters, Elsevier, vol. 100(1), pages 135-137, July.
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  19. Garey Ramey & Valerie A. Ramey, 1994. "Cross-Country Evidence on the Link Between Volatility and Growth," NBER Working Papers 4959, National Bureau of Economic Research, Inc.
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