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McKinnon’s Complementarity Hypothesis: Empirical Evidence for the Arab Maghrebean Countries

  • Amaira Bouzid

    ()

    (University of Tunisia)

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    This study aims to verify the financial repression theory’s assumptions for the Arabic Maghrebean countries during a time period ranging from 1973 to 2003. First, the interest rates in the Arab Maghrebean countries were regulated. Moreover, the low and administered interest rate discourages savings, retards the efficient allocation resources, increases the segmentation of financial markets, constrains investment and in term lowers the economic growth rate. This paper is to provide empirical evidence concerning neoliberal hypothesis for Tunisia, Algeria and Morocco. The money demand and investment function are estimated in static long-run formulations (cointegration regression) as well as in the dynamic formulation (VECM).

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    Article provided by Department of International Business and Economics from the Academy of Economic Studies Bucharest in its journal Romanian Economic Journal.

    Volume (Year): 15 (2012)
    Issue (Month): 44 (June)
    Pages: 23-36

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    Handle: RePEc:rej:journl:v:15:y:2012:i:44:p:23-36
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    1. Thornton, John & Poudyal, Sri Ram, 1990. "Money and Capital in Economic Development: A Test of the McKinnon Hypothesis for Nepal," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(3), pages 395-99, August.
    2. Kapur, Basant K, 1976. "Alternative Stabilization Policies for Less-developed Economies," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 777-95, August.
    3. Arturo Galindo & Fabio Schiantarelli & Andrew Weiss, 2002. "Does Financial Liberalization Improve the Allocation of Investment?: Micro Evidence from Developing Countries," IDB Publications (Working Papers) 6496, Inter-American Development Bank.
    4. Mathieson, Donald J., 1980. "Financial reform and stabilization policy in a developing economy," Journal of Development Economics, Elsevier, vol. 7(3), pages 359-395, September.
    5. Donald J. Mathieson, 1979. "Financial Reform and Capital Flows in a Developing Economy (Réforme financière et flux de capitaux dans une économie en développement) (La reforma financiera y los flujos de capital en una economÃ," IMF Staff Papers, Palgrave Macmillan, vol. 26(3), pages 450-489, September.
    6. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    7. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    8. Fry, Maxwell J, 1978. "Money and Capital or Financial Deepening in Economic Development?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 10(4), pages 464-75, November.
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