Causal Nexus between Financial Integration and Economic Growth : Does Nonlinearity Matter?

Sami Saafi, Meriem Bel Haj Mohamed, Makram Ben Doudou
2016 Journal of Economic Integration  
Empirical studies that rely on a linear framework typically fail to find evidence of a causal link between financial integration and economic growth. In this study, we extend the analysis by applying both linear and nonlinear Granger-causality tests to data for 19 emerging and developing countries. Consistent with previous research, the linear causality analysis reveals only weak causal linkages between financial integration and economic growth. In contrast, the nonlinear causality analysis
more » ... ides evidence of significant nonlinear causality in 18 out of 19 countries. The growth hypothesis holds true for Argentina, Bolivia, Colombia, Morocco, Tunisia, and Venezuela whereas a reverse relation was found in Brazil,
doi:10.11130/jei.2016.31.4.817 fatcat:fj2pwyeve5hw3f3eoql6p3zwva