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DOES FINANCIAL GLOBALIZATION STILL SPUR GROWTH IN DEVELOPING COUNTRIES? CONSIDERING EXCHANGE RATE VOLATILITY

Abstract : This paper analyses the effects of financial globalization on growth in developing countries, focusing on its interaction with exchange rate volatility. Based on dynamic panel data models and the two-step system Generalized Method of Moments (system GMM) estimator, it replicates the method of Gaies et al. (2019a; 2019b) and extends it by exploring a new spillover effect of financial globalization in terms of exchange rate volatility measured by six different indicators. The findings show the positive influence of investment-globalization on growth through the traditional channel of capital accumulation and by reducing the negative impact of exchange rate volatility. These impacts are not ensured by indebtedness-globalization, thereby shedding light on the government's decision in developing countries on foreign capital control policy. These results are robust to changes in the estimator and variables used.
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https://halshs.archives-ouvertes.fr/halshs-02175361
Contributor : Stéphane Goutte <>
Submitted on : Friday, July 5, 2019 - 4:54:01 PM
Last modification on : Tuesday, May 5, 2020 - 11:50:13 AM

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  • HAL Id : halshs-02175361, version 1

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Brahim Gaies, Stéphane Goutte, Khaled Guesmi. DOES FINANCIAL GLOBALIZATION STILL SPUR GROWTH IN DEVELOPING COUNTRIES? CONSIDERING EXCHANGE RATE VOLATILITY. 2019. ⟨halshs-02175361⟩

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