From Reassessing the impact of finance on growth (PDF 21 pages) by Stephen G Cecchetti and Enisse Kharroubi:
A simple scatter plot of five-year non-overlapping averages for 50 advanced and emerging countries over the 1980–2009 period – some 300 data points in all – allows us to construct Graph 1. More specifically, we plot five-year average GDP-per-worker growth (our measure of productivity growth) on the vertical axis against five-year average private credit to GDP (our measure of financial development) on the horizontal axis, both as deviations from their country-specific means.
The relationship is clearly not monotonic. That is, at low levels of credit, more credit is good for growth. But there comes a point where the additional lending and a bigger financial system become a drag on growth.
The relationship is clearly not monotonic. That is, at low levels of credit, more credit is good for growth. But there comes a point where the additional lending and a bigger financial system become a drag on growth.
You're not surprised, are you?
2 comments:
reminds me of the http://pages.cs.wisc.edu/~kovar/hall.html
Oh, that's funny, Jerr.
Macromania links to something along that line. You need a powerpoint viewer to see it.
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