The role of the financial system in the growth–inflation link: the OECD experience

Andrés, Javier; Hernando, Ignacio; López‐Salido, J. David

doi:10.1016/j.ejpoleco.2003.10.007

Cited by 31 publications

(22 citation statements)

References 37 publications

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“…Our finding implies that the relatively higher rate of inflation in Indonesia during the post-1997 financial crisis as compared to other ASEAN countries has been an obstacle for the government to promote economic development. 1 This finding concurs well with several empirical studies which document positive relationship between output and inflation (Bekaert et al 2005;and Hung 2003), while high inflation about 10 -20 percent per annum would adversely affect the longrun economic growth (Gylfason et al 2001;and Andrés et al 2004). Indeed, this study provides an empirical support that it is very crucial for the Indonesian government to maintain price stability by reducing the rate of inflation below two digits in efforts to promote economic growth.…”

Section: Long-run Ardl Estimates Resultssupporting

confidence: 87%

OUTPUT-PRICE DYNAMICS IN THE ASEAN-5 COUNTRIES: Evidence from The Pre- and Post-1997 Financial Turmoil

Kassim

Majid

2008

GADJAH MADA INT. J. BUS.

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We analyze the cyclical behavior between outputs and prices in major ASEAN economies, namely Malaysia, Indonesia, Thailand, Singapore and the Philippines over two sample periods: the pre-crisis period (1990 to 1996) and the post-crisis period (2000 to 2006). Specifically, the study aims to shed the light on two issues: (i) the possibility that there is a change in the patterns of the correlations between real activities and prices in a particular country in the pre-crisis period compared to the post-crisis period; and (ii) the synchronization of real activity and price relationships or the business cycles across the major ASEAN countries. In order to analyze the output-price relationship across the countries and time periods, we adopt several tests including the Pearson correlation analysis, Auto-Regressive Distributed Lag (ARDL) model and Vector Error-Correction Model (VECM). The study documents that the output-price relationship has changed in several countries following the crisis in 1997/1998. While there is a clear business cycles synchronization between the ASEAN-5 countries in the short-run, results have been mixed in the long run. Results of this study contribute towards further enriching the policy recommendations to help ensuring the viability and effectiveness of the economic cooperation between the ASEAN nations.

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Section: Long-run Ardl Estimates Resultssupporting

confidence: 87%

OUTPUT-PRICE DYNAMICS IN THE ASEAN-5 COUNTRIES: Evidence from The Pre- and Post-1997 Financial Turmoil

Kassim

Majid

2008

GADJAH MADA INT. J. BUS.

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“…Demirguc-Kunt & Levine 1996, Andres et al, 1999, Levine et al, 2000and Rioja & Valev 2004. The intuition underlying this is that commercial banks are more likely to identify profitable investments, monitor managers' decisions, facilitate risk management and mobilise savings than central banks.…”

Section: (A) Measures Of Financial Intermediaries Developmentmentioning

confidence: 99%

Does financial development affect growth?

2009

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This article contributes to the literature on the relationship between financial development and economic growth in three ways: it utilizes recently developed techniques for generalized methods of moments (GMM) one-step estimation with dynamic panel models, it focuses exclusively on a sample of developing countries and it uses as proxies for financial development variables which capture both banking sector and stock market effects. The results provide evidence, based on a panel of annual data for 30 developing countries, that while the stock market variables are positively and significantly related to growth, their presence results in the standard banking sector variables, credit to the private sector and liquid liabilities, having negative effects on growth.

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“…In the end, economic growth will be reduced. 6 See Andrés et al (2004) for an application to a sample of developed countries.…”

Section: Strategy For Cointegration and Data Issuesmentioning

confidence: 99%

Growth, bank credit, and inflation in Mexico: evidence from an ARDL-bounds testing approach

2014

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This paper explores the long-run effects of inflation on the dynamics of private sector bank credit and economic growth in Mexico over the period 1969-2011. With an ARDL-type model, the statistical results suggest that the availability of private sector bank credit in the economy exerts a positive impact on real GDP. In addition, inflation rates have contributed negatively to the increase in private credit, liquid liabilities, and financial development. A key outcome is that one percent increase in inflation is associated with a 0.07 % fall in long-run real rate of output through its effect on bank credit to the private sector. Another crucial finding is that policies of financial liberalization have helped stimulate economic growth. Reinforcing the literature on finance and growth, this study reaffirms that inflation rates are detrimental to long-run financial development and economic growth.

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The role of the financial system in the growth–inflation link: the OECD experience

Cited by 31 publications

References 37 publications

OUTPUT-PRICE DYNAMICS IN THE ASEAN-5 COUNTRIES: Evidence from The Pre- and Post-1997 Financial Turmoil

OUTPUT-PRICE DYNAMICS IN THE ASEAN-5 COUNTRIES: Evidence from The Pre- and Post-1997 Financial Turmoil

Does financial development affect growth?

Growth, bank credit, and inflation in Mexico: evidence from an ARDL-bounds testing approach

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