Abstract
In a seminal article, Levine et al. (2000) provide cross-sectional evidence showing that financial development has positive average impact on long-run growth, using a sample of 71 countries. We argue that the evidence is sensitive to the presence of outliers.
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Notes
- 1.
We perfectly replicate the sample descriptive statistics.
- 2.
As already mentioned, we use a two-step efficient GMM estimator, selected (among the existing types of GMM estimators) for being the one that, after repeated replication attempts, provides the closest estimates to those presented by LLB. It is worth stressing that LLB do not clearly report which type of GMM estimator is used in their cross-sectional analysis.
- 3.
The standard errors are bootstrapped.
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Acknowledgements
Financial support from the FCT-Portugal is gratefully acknowledged. For useful comments and discussions, the author would like to thank Monica Andini, Santiago Budría, Ricardo Cabral, Günther Lang, Marco Pagano, Pedro Telhado Pereira, and the participants at “The Economics of Imperfect Markets” conference (Rome, 16–17 May 2008). The usual disclaimer applies.
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Andini, C. (2010). Financial Development and Long-Run Growth: Cross-Sectional Evidence Revised. In: Calcagnini, G., Saltari, E. (eds) The Economics of Imperfect Markets. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2131-4_6
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DOI: https://doi.org/10.1007/978-3-7908-2131-4_6
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