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Can Dynamic Panel Data Explain the Finance-Growth Link? An Empirical Likelihood Approach

Listed author(s):
  • Umut Oguzoglu

    (Department of Economics,University of Manitoba and IZA)

  • Thanasis Stengos

    (Department of Economics, University of Guelph)

The short run effect of the financial intermediary development on economic growth is ana- lyzed using an unbalanced panel of 77 countries covering 35 years. Empirical Likelihood (EL) estimation is used and compared to more conventional GMM methods that weight moment conditions equally over the sample. However, if a part of the data is associated with only weak instruments, GMM estimators are subject to considerable small sample bias. EL appropriately re-weights the moment restrictions to deal with that problem. Using EL, we obtain more robust estimates of the effect of financial intermediation on economic growth than GMM.

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Article provided by Rimini Centre for Economic Analysis in its journal Review of Economic Analysis.

Volume (Year): 3 (2011)
Issue (Month): 2 (October)
Pages: 129-148

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Handle: RePEc:ren:journl:v:3:y:2011:i:2:p:129-148
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  11. Kalaitzidakis, P. & Mamuneas, T.P. & Savvides, A. & Stengos, T., 2000. "Measures of Human Capital and Nonlinearities in Economic Growth," Working Papers 2000-5, University of Guelph, Department of Economics and Finance.
  12. Levine, Ross, 1998. "The Legal Environment, Banks, and Long-Run Economic Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 596-613, August.
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