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Estimating the permanent growth effects of financial liberalization: The case of Malaysia

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  • Rao, B. Bhaskara

Abstract

We argue that the specifications used to estimate the permanent growth effects of reforms in the financial sector are unsatisfactory. Using a modified specification and data for the period 1970 to 2004, we show developments in the financial sector in Malaysia have a small but significant permanent effect on the growth of output. Our results are different from the conclusions in a recent work on this topic.

Suggested Citation

  • Rao, B. Bhaskara, 2008. "Estimating the permanent growth effects of financial liberalization: The case of Malaysia," MPRA Paper 8278, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:8278
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    References listed on IDEAS

    as
    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Ross Levine & Asli Demirgüç-Kunt, 2008. "Finance, Financial Sector Policies, and Long-Run Growth," World Bank Publications - Books, The World Bank Group, number 28021.
    3. William Easterly & Ross Levine & David Roodman, 2004. "Aid, Policies, and Growth: Comment," American Economic Review, American Economic Association, vol. 94(3), pages 774-780, June.
    4. Ang, James B. & McKibbin, Warwick J., 2007. "Financial liberalization, financial sector development and growth: Evidence from Malaysia," Journal of Development Economics, Elsevier, vol. 84(1), pages 215-233, September.
    5. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Growth effects of financial development; Solow model; Malaysia;
    All these keywords.

    JEL classification:

    • F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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