IDEAS home Printed from https://ideas.repec.org/p/qmw/qmwecw/885.html
   My bibliography  Save this paper

The Growth-Finance Nexus in Brazil: Evidence from a New Dataset, 1890-2003

Author

Listed:
  • Nauro Campos

    (Brunel University, London)

  • Menelaos Karanasos

    (Brunel University, London)

  • Panagiotis Koutroumpis

    (Queen Mary University of London)

Abstract

This study revisits the growth-finance nexus using a new econometric approach and unique data set. In particular by employing the smooth transition framework and annual time series data for Brazil from 1890 to 2003, we attempt to address on the one side, what is the relationship between financial development, trade openness, political instability and economic growth and, on the other, how it changes over time. The main finding is that financial development has a mixed positive and negative time-varying impact on economic growth, which significantly depends on jointly estimated trade openness thresholds. Moreover our estimates highlight a positive impact of trade openness on growth but with interesting variation regarding their size and power, whereas the effect of political instability (both formal and informal) on growth is mainly negative. We also find that changes between regimes tend not to be smooth. Finally, our estimates show that in 57% of the years in which financial development has a below the mean effect, we find that trade openness experiences a substantial above the mean change.

Suggested Citation

  • Nauro Campos & Menelaos Karanasos & Panagiotis Koutroumpis, 2019. "The Growth-Finance Nexus in Brazil: Evidence from a New Dataset, 1890-2003," Working Papers 885, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:885
    as

    Download full text from publisher

    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2019/wp885.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sebastian Edwards, 1994. "Trade and Industrial Policy Reform in Latin America," NBER Working Papers 4772, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hester, Annette & Beaulieu, Eugene, 2000. "Trade Agreements in the Americas: Regionalism Converging to Globalization," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 1(2), pages 1-15.
    2. Madani, Dorsati H., 2001. "South-South regional integration and industrial growth : the case of the Andean Pact," Policy Research Working Paper Series 2614, The World Bank.
    3. Fernandes, Ana M., 2007. "Trade policy, trade volumes and plant-level productivity in Colombian manufacturing industries," Journal of International Economics, Elsevier, vol. 71(1), pages 52-71, March.
    4. Klaus Schmidt-Hebbel, 2006. "Chile's Economic Growth," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 5-48.
    5. Michael A. Landesmann & Robert Stehrer, 2007. "Income Distribution, Technical Change And The Dynamics Of International Economic Integration," Metroeconomica, Wiley Blackwell, vol. 58(1), pages 45-73, February.
    6. Alvaro Forteza & Rossana Patrón, 2003. "Trade Liberalisation with Costly Adjustment," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 95-125, May.
    7. Alam, Ila M Semenick & Morrison, Andrew R, 2000. "Trade Reform Dynamics and Technical Efficiency: The Peruvian Experience," The World Bank Economic Review, World Bank, vol. 14(2), pages 309-330, May.
    8. Berry, Albert, 1995. "The Social Challenge of the New Economic Era in Latin America," 1995: Economic Integration in the Western Hemisphere Symposium, June 7-9, 1995, San Jose, Costa Rica 50818, International Agricultural Trade Research Consortium.
    9. Albuquerque, Rui & Rebelo, Sergio, 2000. "On the dynamics of trade reform," Journal of International Economics, Elsevier, vol. 51(1), pages 21-47, June.
    10. Laird, Sam, 1997. "MERCOSUR: Objectives and achievements," WTO Staff Working Papers TPRD-97-02, World Trade Organization (WTO), Economic Research and Statistics Division.
    11. repec:bla:rdevec:v:14:y:2010:i:s1:p:563-576 is not listed on IDEAS
    12. Nauro Campos & Ekaterina Glebkina & Menelaos Karanasos & Panagiotis Koutroumpis, 2023. "Financial Development, Political Instability, Trade Openness and Growth in Brazil: Evidence from a New Dataset, 1890-2003," Open Economies Review, Springer, vol. 34(4), pages 831-861, September.
    13. Rajapatirana, Sarath, 1994. "The evolution of trade treaties and trade creation : lessons for Latin America," Policy Research Working Paper Series 1371, The World Bank.
    14. Jorge Saba Arbache, 2004. "Do Structural Reforms always Succeed?: Lessons from Brazil," WIDER Working Paper Series RP2004-58, World Institute for Development Economic Research (UNU-WIDER).
    15. Mariam Camarero & Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann & Cecilio Tamarit, 2016. "Trade Openness and Income: A Tale of Two Regions," The World Economy, Wiley Blackwell, vol. 39(3), pages 386-408, March.
    16. Roberto Alvarez & J. Rodrigo Fuentes, 2006. "Trade Reforms and Manufacturing Industry in Chile," Palgrave Macmillan Books, in: Patricio A. Aroca & Geoffrey J. D. Hewings (ed.), Structure and Structural Change in the Chilean Economy, chapter 4, pages 71-94, Palgrave Macmillan.
    17. Perez-Aleman, Paola, 2000. "Learning, Adjustment and Economic Development: Transforming Firms, The State and Associations in Chile," World Development, Elsevier, vol. 28(1), pages 41-55, January.
    18. Hester, Annette & Beaulieu, Eugene, 2000. "Trade Agreements in the Americas: Regionalism Converging to Globalization: Technical Annex," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 1(2), pages 1-14.
    19. repec:ilo:ilowps:462962 is not listed on IDEAS
    20. Laird, Sam, 1997. "WTO rules and good practice on export policy," WTO Staff Working Papers TPRD-97-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    21. Puyana, Alicia., 2011. "Economic growth, employment and poverty reduction : a comparative analysis of Chile and Mexico," ILO Working Papers 994629623402676, International Labour Organization.
    22. Czarnecka-Gallas Marta, 2015. "The Institutional and External Factors Behind the Switch of a Country’s Economic Growth Strategy. The Case of the Brazilian Economic Policy," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 45(1), pages 57-82, March.

    More about this item

    Keywords

    Economic growth; financial development; political instability; smooth transition models; trade openness;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qmw:qmwecw:885. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nicholas Owen (email available below). General contact details of provider: https://edirc.repec.org/data/deqmwuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.