Financial Development and Growth Volatility: Time Series Evidence for Mexico and The United States

Rodolfo Cermeño, María Roa García () and Claudio González Vega

No DTE 544, Working Papers from CIDE, División de Economía

Abstract: This paper explores the influences of financial deepening on growth and its volatility. Following a review of the theoretical literature that has attempted to explain these relationships, the paper presents time series evidence for the cases of Mexico and the US. The results suggest that, in the case of the US, financial deepening has been related to the rate of real output growth but that finance has not shown a significant relationship with output volatility. In the Mexican case, financial deepening has reduced the volatility of growth which, in turn, has induced higher output growth rates. Further, higher US growth rates have resulted in higher and less volatile growth rates in the Mexican economy.

Keywords: Financial development; monetary and credit deepening; growth; volatility; VAR models; GARCH models (search for similar items in EconPapers)
JEL-codes: C22 C32 F43 O40 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2012-10
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.economiamexicana.cide.edu/RePEc/emc/pdf/DTE/DTE544.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:emc:wpaper:dte544

Access Statistics for this paper

More papers in Working Papers from CIDE, División de Economía Contact information at EDIRC.
Bibliographic data for series maintained by Mateo Hoyos ().