Journal
JOURNAL OF MACROECONOMICS
Volume 40, Issue -, Pages 308-322Publisher
ELSEVIER
DOI: 10.1016/j.jmacro.2014.01.008
Keywords
Financial development; Economic growth; Quantile regression; Panel data
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This paper argues that the effect of a financial stimulus on growth can vary along quantiles of the conditional growth distribution. We support this argument by presenting a theoretical finance-growth model, mainly inspired by Pagano (1993) and Canarella and Pollard (2004), where quantile parameter heterogeneity plays a role. In addition, controlling for a set of observed country characteristics and for all time-invariant characteristics, through the panel dataset of Levine et al. (2000), we present evidence that countries in the upper tail of the conditional growth distribution react more than countries in the lower tail to the same financial stimulus. (C) 2014 Elsevier Inc. All rights reserved.
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