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Interaction Effects in the Relationship Between Growth and Finance

Author

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  • Aghion Philippe

    (Harvard University)

Abstract

This paper analyzes how interacting financial development with initial income, macroeconomic volatility and policy variables, can improve our understanding of convergence and divergence across countries, and also restore the significance of correlations between growth and volatility and therefore between growth and macropolicy, even when controlling for country fixed effects or when eliminating countries with extreme policies or bad institutions.

Suggested Citation

  • Aghion Philippe, 2006. "Interaction Effects in the Relationship Between Growth and Finance," Capitalism and Society, De Gruyter, vol. 1(1), pages 1-29, May.
    • Handle: RePEc:bpj:capsoc:v:1:y:2006:i:1:n:2
    DOI: 10.2202/1932-0213.1003
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    Cited by:

    1. Rachel Griffith & John Van Reenen, 2021. "Product market competition, creative destruction and innovation," IFS Working Papers W21/43, Institute for Fiscal Studies.

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