Abstract
Using recently developed panel data techniques on data for 43 developing countries over the period 1970–1998, this article provides an exhaustive analysis of causality between aggregate private investment and financial development. A common factor approach on annual data, allowing for global interdependence and heterogeneity across countries, suggests positive causal effects going in both directions. The finding has rich implications for the development of financial markets and the conduct of macroeconomic policies in developing countries in an integrated global economy.
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Huang, Y. Private investment and financial development in a globalized world. Empir Econ 41, 43–56 (2011). https://doi.org/10.1007/s00181-010-0394-3
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DOI: https://doi.org/10.1007/s00181-010-0394-3