Current Accounts in a Currency Union, Issues 2009-2127This paper studies whether the policies that, over the past decades, liberalized bankingsystems around the world have resulted in deeper credit markets. To measure banking sectorreforms we use a new index that tracks policy changes in five separate areas for 91 countriesover 1973-2005. We find that reforms have led to financial deepening, but only in countrieswith institutions that place checks and balances on political power. We interpret this asevidence of a complementarity between financial sector reforms and political institutions thatprotect property rights. Other country characteristics do not seem to significantly influencethe effect of banking reforms on financial development. |
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13 other advanced account and real adjustment to shocks advanced countries advanced economies area countries b₁ balance in percent Coeff Error Coeff Coeff Standard Error country-specific current account cross-sectional current account currency union current account balance current account dispersions current account divergences current account dynamics current account imbalances current account persistence current account shocks d₁ dependency ratio determinants of current dispersion of current Drow effective exchange rate EMU members error bands euro area euro-area countries European Monetary System exchange rate changes exchange rate dynamics exchange rate persistence exchange rate regimes exchange rate shocks F-tests Fiscal balance fitting equation foreign assets fundamental current account Giavazzi IMF staff calculations IMF staff estimates impulse responses monetary union non-EMU oil balance percent level percent of GDP population growth rate rigidity real effective exchange real exchange rate reerd relative to Germany shocks and dynamics single currency speed of adjustment variables