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Capital Market, Severity of Business Cycle, and Probability of Economic Downturn

  • Tharavanij, Piyapas

This paper investigates the effect of capital market development on severity of economic contraction, and probability of economic downturn. The major finding is that countries with deeper capital market would face less severe business cycle output contraction, and lower chance of an economic downturn. The results hold even after controlling for other relevant variables, country specific effects, and state dependence. However, marginal effects are relatively small. Results are generated using panel estimation technique with panel data from 44 countries covering the years 1975 through 2004.

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File URL: http://mpra.ub.uni-muenchen.de/4953/1/MPRA_paper_4953.pdf
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File URL: http://mpra.ub.uni-muenchen.de/5189/1/MPRA_paper_5189.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4953.

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Date of creation: 09 Sep 2007
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Handle: RePEc:pra:mprapa:4953
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