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Finance and macroeconomic volatility

  • Cevdet Denizer
  • Murat F. Lyigun
  • Ann L. Owen

Countries with more developed financial sectors experience less fluctuation in the growth of real per capita output, consumption and investment. However, the manner in which the financial sector develops matters. The relative importance of banks in the financial system is important in explaining consumption and investment volatility, and the proportion of credit provided to the private sector explains the volatility of consumption and output. The main results are generated using fixed-effects estimation with panel data from 70 countries covering the years 1956 through 1998.

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number 670.

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Date of creation: 2000
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Handle: RePEc:fip:fedgif:670
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