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Title: |
Saving, Investment, Growth, and Financial
Distortions in Pacific Asia and Other Developing Areas |
| Author: |
Fry, Maxwell J. |
| Author
Affiliation: |
Bank of England
and U Birmingham |
| Source: |
International Economic Journal, Spring 1998, v. 12, no. 1, pp. 1-24 |
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Publication Date: |
Spring 1998 |
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Abstract: |
I estimate a simultaneous-equation model
in which the real deposit rate of interest and the black market exchange
rate premium affect saving, investment, export growth, and output
growth. The estimates corroborate earlier findings that direct effects
of financial distortions on saving are minuscule. Because a major
determinant of saving is the output growth rate, however, I find that
saving is influenced substantially, albeit indirectly, by financial
distortions through their effects on investment, export growth, and
output growth. Simulations indicate that. differences in the average
values of the financial distortion variables explain approximately 50
percent of the difference in saving ratios and 75 percent of the
difference in output growth rates between five Pacific Asian countries
and 11 countries in other developing areas. |
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