Title

The Growth Effects of Financial Openness and Exchange Rates

Published In

International Review of Economics and Finance

Document Type

Citation

Publication Date

3-1-2017

Abstract

This study examines the role of financial openness and international financial integration when choosing an exchange rate regime where the objective is to maximize productivity growth. The discussion begins with a simple generalization of a framework with credit constraints and concludes that the negative effects of exchange rate volatility on productivity growth are reduced the more financially integrated into the international capital flows a country is. Second, an empirical analysis of productivity growth provides thresholds and addresses potential endogeneity problems. Robust and significant results find that a high degree of financial openness can mitigate the negative effect of exchange rate flexibility on growth.

DOI

10.1016/j.iref.2016.12.015

Persistent Identifier

http://archives.pdx.edu/ds/psu/19957

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