Titolo
How financial development and inflation may affect growth
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1994 - Fascicolo: 32 - Pagina iniziale: 3 - Pagina finale: 35

The impact of financial development and inflation on economic growth is studied within an endogenous growth framework, in which the sector that affects both real money demand and capital productivity is interpreted as the financial sector. First, financial liberalization is found to have a positive effect on growth, the size of which depends on the pre-liberalization real interest and inflation rates. Moreover, an extension of the standard model is shown to generate a strong negative relationship between inflation and growth. In contrast to the theoretical literature, which usually predicts a rather small effect, this result is consistent with the empirical regularities.



Testo completo: http://hdl.handle.net/1814/511

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