Front Matter Page
IMF Institute
Contents
I. Introduction
II. Inflation and Financial Depth: Some Theoretical Considerations
A. Adverse Selection or Moral Hazard Problems in Credit Markets
B. Costly State Verification Frictions in Credit Markets
C. Some Empirical Evidence
III. Data Issues
IV. Model Specification and Estimation
A. Estimation Method
B. Inference
V. Estimation and Inference Results
A. Test for the Existence of Threshold Effects
B. Estimation Results
C. Correcting for the Potential Endogeneity of Inflation
D. The Stock Market
VI. Conclusions
Tables
1. Test Results of Threshold Effects
2. NLLS
3. NLLS with Instrumental Variables
4. Stock Market (NLLS)
Figures
1. Averaged Relationship Between Inflation and Financial Depth
2. Scatter Plot of Inflation and Financial Depth
3. Residual Sum of Squares as a Function of the Threshold Level
4. Effect of Inflation on Financial Depth
5. Residual Sum of Squares as a Function of the Threshold Level for the Stock Market
6. Effect of Inflation on Financial Depth for the Stock Market
References