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Interaction effects in the relationship between growth and finance

Aghion, P.; (2006) Interaction effects in the relationship between growth and finance. Capitalism and Society , 1 (1) pp. 1-27. 10.2202/1932-0213.1003. Green open access

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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.

Type: Article
Title: Interaction effects in the relationship between growth and finance
Open access status: An open access version is available from UCL Discovery
DOI: 10.2202/1932-0213.1003
Publisher version: http://dx.doi.org/10.2202/1932-0213.1003
Language: English
Additional information: Article 2. The Berkeley Electronic Press © 2006
Keywords: Financial development, convergence, volatility, interaction effects, countercyclical policy
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/17747
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