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The Role of Domestic Debt Markets in Economic Growth :, An Empirical Investigation for Low-Income Countries and Emerging Markets, S. M. Ali Abbas, Jakob Christensen

We develop a new public domestic debt (DD) database covering 93 low-income countries and emerging markets over the 1975-2004 period to estimate the growth impact of DD. Moderate levels of non-inflationary DD, as a share of GDP and bank deposits, are found to exert a positive overall impact on economic growth. Granger-causality regressions suggest support for a variety of channels: improved monetary policy; broader financial market development; strengthened domestic institutions/accountability; and enhanced private savings and financial intermediation. There is some evidence that, above a ratio of 35% percent of bank deposits, DD begins to undermine growth, lending credence to traditional crowding out and bank efficiency concerns. Importantly, the growth contribution of DD is higher if it is marketable, bears positive real interest rates and is held outside the banking system. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Table Of Contents
Contents; I. Introduction; II. Existing Theoretical and Empirical Studies; A. Pros and cons of domestic debt; B. Empirical Survey; C. Testable hypotheses; III. Data and Econometric Framework; A. New domestic debt database; B. Controls and causality variables; C. Econometric specification for growth regressions; IV. Empirical Results; A. Granger-causality tests on the endogeneity of DD; B. The behavior of control variables in growth regressions on DD; C. The growth impact and optimal size of DD; D. The channels of influence: Investment volume vs. efficiency
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (42 p.)
Specific Material Designation
Form Of Item

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