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Title: Financial restraints and private investment: evidence from a nonstationary panel
Authors: Costantini, Mauro
Demetriades, Panicos
James, Gregory
Lee, Kevin C.
Issue Date: 2013
Publisher: John Wiley & Sons (© Western Economic Association International)
Citation: CONSTANTINI, M. ... et al., 2013. Financial restraints and private investment: evidence from a nonstationary panel. Economic Inquiry, 51 (1), pp. 248-259.
Abstract: We employ recently developed panel data methods to estimate a model of private investment under financial restraints for 20 developing countries using annual data for 1972-2000. We show that the qualitative nature of the results varies depending on whether we take into account cross-country effects. When we allow for cross-sectional dependence, investment displays more sensitivity to world capital market conditions and exchange rate uncertainty. A perhaps even more surprising result is the finding that countries that managed to suppress domestic real interest rates without generating high inflation enjoyed higher levels of private investment than those that would have been obtained under liberalized conditions.
Description: This is the peer reviewed version of the following article: CONSTANTINI, M. ... et al., 2013. Financial restraints and private investment: evidence from a nonstationary panel. Economic Inquiry, 51 (1), pp. 248-259, which has been published in final form at: http://dx.doi.org/10.1111/j.1465-7295.2011.00424.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for self-archiving.
Sponsor: This work was supported by the ESRC [grant numbers RES-156-25-0009 and PTA-026-27-1437].
Version: Accepted for publication
DOI: 10.1111/j.1465-7295.2011.00424.x
URI: https://dspace.lboro.ac.uk/2134/15332
Publisher Link: http://dx.doi.org/10.1111/j.1465-7295.2011.00424.x
ISSN: 0095-2583
Appears in Collections:Published Articles (Economics)

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