Exam #3 ReviewChapter 10· Balance of payment statements · .docx

Exam #3 Review:
Chapter 10:
· Balance of payment statements
· Know all the components of the balance of payment statements
· Balance of international indebtedness
· Know the debit and credit transactions of the balance of
payments.
· Which is debit and which one is credit
· What determine the US balance of trade
· Essay: How do we measure international investment position
of the US?
· Essay: How did the US become the net debtor so quickly?
Chapter 11:
· What happened to the international merchandise transactions
(trade) if the US dollar is appreciated or depreciated against
other currencies?
· What depreciation is and what appreciation is?
· Know the differences between the spot market and the forward
market?
· What is spot market
· What is forward market
· How do you prevent the loss and remove the risks of a foreign
currency transaction?
· Essay: How do you trade on the future market?
· Essay: Differences of trading between in the future market and
the forward market?
Chapter 15:
· Study Manage floating exchange rate system.
· What happens to the US dollar if the inflation of the US and
inflation in a foreign country are different?
· Which exchange rate system does not require monetary
reserves?
· Under the floating exchange rate system, if import and exports
increase or falls, what happens to the dollar value?

· What happens to the balance of trade when the currency is
appreciated or depreciated?
· Essay: difference between current pect and adjustable pect
exchange rate.
Bonus question about the video that wi will finished on monday.
ECO-358: Assignment 4, Article Analysis
1. Please read the attached article several times and highlight its
main points and/or arguments. If you need additional research
to write your analysis of this article, please do so and cite your
sources appropriately and make up a reference page at the end
of your assignment to list sources (APA format is required).
2. Choose 7 concepts and/or theories from our textbook to use
as guidance and foundation to analyze the article. These
concepts and theories can be from any chapter of the textbook.
You should choose concepts and theories that are
broad/big/important enough so you can write a lot about them
with information from the article. Simple definitions don’t have
much to write, don’t choose them.
3. Your paper must include an article summary (very short one,
just 1 paragraph), a body, and a brief conclusion. Please show
me how the article contents relate to the concepts/theories you
choose or vice versa. Each concept/theory has to be underlined
and also has textbook page number reference on your paper. The
minimum length is 5 double space pages, excluding title and
reference pages.
4. Your paper has to be in APA format and style. Visit Doane
College writing center, or read APA guide posted on BB for
guidance on APA writing. There are many requirements on APA
format. Here are some most basic and essential ones you must

have on your paper: cover page, reference page, running head,
page number, quotation, correct font, size, and style…Make
sure you have someone proofread your paper before you submit.
5. You should use formal language and style on this assignment.
If you don’t like the attached article, you may choose your own
article with my approval a week before assignment 4 deadline.
Only articles from recognized magazines or peer review
journals will be accepted. The article has to be long enough for
you to write. Due date is on Schedule.
Email me right away if you have questions. I’m looking for
college level papers. Happy writing!
WHAT INTERACTIONS BETWEEN
FINANCIAL GLOBALIZATION AND
INSTABILITY?—GROWTH IN DEVELOPING
COUNTRIES
BRAHIM GAIES1, STEPHANE GOUTTE2* and KHALED
GUESMI3
1IPAG Lab, IPAG Business School, Paris, France
2University Paris 8, LED, France and Paris Business School,
PSB, Paris, France
3IPAG Lab, IPAG Business School, Paris, France and Telfer
School of Management, University of
Ottawa, Canada
Abstract: This paper tests the effects of the impact of financial
globalization on economic growth,

examining its interaction with financial instability for a sample
of 72 developing countries over the
period 1972–2011, using dynamic panel estimator ‘two-step
Generalized Method of Moments’
(two-step system GMM). The main results of the paper are the
following: (i) financial instability and
indebtedness-globalization decrease growth; (ii) financial
globalization and investment-globalization
increase growth; (iii) indebtedness-globalization increases the
effect of financial instability on growth;
(iv) investment-globalization decreases the effect of financial
instability on growth; and (vi) financial
globalization decreases the effect of financial instability on
growth. These results are robust in a set of
tests consisting of the insertion of alternative variables of
financial instability, the inclusion of new
control variables, inter alia an indicator of banking crises, using
different time periods, and changing
of the composition of the sample. © 2018 John Wiley & Sons,
Ltd.
Keywords: financial globalization; GMM system; spillover
effects; growth; financial instability;
interaction variables
JEL Classification: C23; C26; E44; F21; F36
1 INTRODUCTION
The main purpose of this article is to determine the impact of
financial globalization on
economic growth in developing countries, examining its
interaction with financial
*Correspondence to: Stephane Goutte, University Paris 8, LED,
France and Paris Business School, PSB, Paris,
France.

E-mail: [email protected]
© 2018 John Wiley & Sons, Ltd.
Journal of International Development
J. Int. Dev. 31, 39–79 (2019)
Published online 11 September 2018 in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/jid.3391
http://orcid.org/0000-0002-5206-866X
http://crossmark.crossref.org/dialog/?doi=10.1002%2Fjid.3391
&domain=pdf&date_stamp=2018-09-11
instability. There are two conflicting positions on the empirical
effects of financial
globalization.
On the one hand, the proponents of financial liberalization
attribute the economic take-
off of emerging countries to the expansion of their financial
markets and to the
mobilization of significant foreign savings that finance the
investment and expansion of
technology transfer linked to financial globalization (Quinn,
1997; Bekaert, Harvey, &
Lundblad, 2011; De Nicolo & Juvenal, 2014; Agrawal, 2015).
On the other hand, the opponents of this point of view attribute
the economic difficulties
of certain developing countries with regard to indebtedness,
negative growth and crises, to
a large extent to their adherence to the free worldwide
circulation of capital (Rodrik, 1998;
Mougani, 2012; Gehringer, 2013). More specifically, the
UNCTAD (2012) goes as far as
to speak of ‘the paradox of finance-driven globalization’, in

which the external financial
globalization has not kept its theoretical promises—namely,
better worldwide mobilization
and allocation of savings for faster convergence of developing
countries and a better share
and diversification of the risks of cost reduction of capital at
the international level
(McKinnon, 1973; Shaw, 1973).
Thus, the absence of empirical consensus regarding the question
(Obstfeld, 2009)
renders as complex to verify it as to refute a more important
involvement of developing
countries in the process of financial globalization. In search of
an answer to this problem,
a new point of view on the subject has emerged. It assumes that
to a larger extent than the
direct effects, financial globalization leads to spillover effects
(indirect effects) that impact
indirectly on economic growth and that by acting primarily in
the development of domestic
financial system (Masten, Coricelli, & Masten, 2008; Estrada,
Park, & Ramayandi, 2015
Ahmed, 2016; Trabelsi & Cherif, 2017).
In contrast, another new literature does not exclude the
possibility of financial
globalization entailing indirect negative effects and
underestimated the macroeconomic
constraints attributed to it in the last century, in particular after
financial crises (Rodrik
& Subramanian, 2009; Joyce, 2011; Lane & McQuade, 2014).
As a matter of fact, if
financial opening promotes the irregular financial development
of a developing country,
it can act as an amplifier of financial instability and of its

potential mischiefs in relation
to growth (Guillaumont & Kpodar, 2006; Loayza & Rancière,
2006; Eggoh, 2010). In this
context, the foreign capital flows injected into the receiving
financial system can have a
procyclic role, amplifying the negative impact of financial
instability on growth (Aghion,
Bacchetta, & Banerjee, 2004; Caballé, Jarque, & Michetti,
2006). That is how financial
globalization may catalyse financial instability, which in turn
may constrain growth in
developing countries because their regulatory systems are less
mature than those of
developed countries. The result is a decline in investment,
production and international
trade.
Considering all these controversies, three questions are worth
being raised in the case
of developing countries: (i) What is the direct effect of financial
globalization on
growth? (ii) What is the direct effect of financial instability on
growth? (iii) What is
the spillover (indirect) effect of financial globalization via the
impact of financial
instability on growth?
In order to find possible answers to these questions, firstly, we
study the direct impacts
of investment-globalization [stocks of external assets and
liabilities, foreign direct
investment (FDI) plus portfolio equity], indebtedness-
globalization (stocks of external
assets and liabilities, debt) and financial globalization
(investment-globalization plus
indebtedness-globalization) on economic growth. Secondly, we

examine the direct impact
40 B. Gaies et al.
© 2018 John Wiley & Sons, Ltd. J. Int. Dev. 31, 39–79 (2019)
DOI: 10.1002/jid
of financial instability (in the sense of an irregularity of
financial development, and not
only in terms of crisis) on growth. Thirdly, we analyse the
indirect impacts (spillover
effects) of financial globalization, investment-globalization and
indebtedness-globalization
on growth through its interaction with financial instability.
Through our study, we find four main results. In the first place,
financial instability has a
negative effect on economic growth. Second, not only does
investment-globalization have
a direct positive effect on growth but also has an additional
spillover and positive effect,
reducing the negative impact of financial instability.
Furthermore, in contrast, not only
does indebtedness-globalization have a direct negative effect on
growth but also has a
spillover and negative effect, increasing the negative impact of
financial instability on
growth. Lastly, in sum, financial globalization (investment-
globalization plus
indebtedness-globalization) positively influences growth
directly and collaterally through
its interaction with financial instability.
Our study makes three main contributions to the literature.
First, it goes beyond the

recent literature on the tripartite relationship between financial
globalization, financial
development and economic growth in developing countries
(Estrada et al., 2015;
Ahmed, 2016; Trabelsi & Cherif, 2017). In fact, this literature
does not take into
account the effect of the irregularity of financial development,
namely, financial
instability. In the second place, we complement the previous
empirical analyses focused
on the effects of financial instability on growth (Guillaumont &
Kpodar, 2006; Loayza
& Rancière, 2006; Eggoh, 2010). These analyses neglected the
interaction between
financial globalization and financial instability. Thirdly, we
give an empirical view to
the theoretical modelling of financial instability in small open
economies (Aghion
et al., 2004; Caballé et al., 2006).
The following sections of the article will be organized as
follows. Section 2 constitutes a
literature review; Section 3 describes the data used, while
Section 4 discusses the
methodology and the results. Section 5 presents the conclusions
drawn.
2 LITERATURE REVIEW
2.1 Financial Globalization and Growth
Overall, academic work treating the tandem of financial
globalization and economic
growth can be classified in three big groups. The first group
represents those studies that

prove that financial globalization has a direct positive effect on
economic growth. The
second group includes investigations that have shown that
financial globalization has a
mitigating effect on growth.1 The last group comprises research
inquiries that have
underscored the direct negative or insignificant effect on
economic growth. For the first
group, Quinn (1997) was one of the first economists to
demonstrate without ambiguity a
direct and net positive relationship between financial opening
and economic growth. The
sample studied by the author, comprising a period from 1958 to
1989, consisted of 64
developed and developing countries. In order to examine the
nature of the relationship
between financial opening through portfolio investment and
economic growth, Bekaert,
Harvey, and Lundblad (2005) studied 95 developed and
developing countries during the
1This means that the impact of financial globalization on
economic growth is indirect and/or depends on the nature
of the financial opening (foreign direct investment, portfolio
investments, debts, foreign aids, …).
Growth: Financial Globalization, Instability 41
DOI: 10.1002/jid
period 1980–1997. Their conclusion is that an opening of the
equity market increases GDP
per capita by an annual average of 1 per cent. More recently,

Bekaert et al. (2011) analysed
the effects of financial globalization (opening of capital
accounts and of the equity market)
in a panel of 96 developed and developing countries between
1980 and 2006. The authors
demonstrate the robustness of the impact of financial opening
both on growth and on total
factor productivity. Furthermore, using a sample comprising 48
emerging and developing
countries, De Nicolo and Juvenal (2014) highlight the fact that
financial globalization and
financial integration increase economic growth stabilize and
develop the real sphere of the
economy. According to the authors, this positive effect is even
more important in a context
of good institutional quality and governance. Lastly, the paper
by Agrawal (2015) studies
the nature of the relationship between FDI and economic growth
in the BRICS economies
between 1989 and 2012. The empirical methodology used is
panel data co-integration and
causality analysis. The results from Agrawal (2015) confirm
that FDI and economic
growth are co-integrated in the panel countries and the causality
test highlights the long-
term causality between these two variables. In the second group,
Masten et al. (2008)
examine the effect on economic growth of financial opening and
financial development,
separately and in interaction, in 31 European economies
between 1996 and 2004. The
authors show that financial development is a necessary
condition for the sample countries
to absorb foreign capital flows and to harness their benefits.
Indirectly, this condition
forces open countries to develop their domestic financial

systems. Recently, Estrada
et al. (2015) found that financial development increases
economic growth in developing
countries but that this effect is lower in developed ones.
Conversely, the authors argue that
the direct positive impact of financial globalization on output is
stronger in advanced
economies than in less developed economies. They conclude
that the financial systems
are more efficient to allocate foreign savings in developed
countries than in developing
economies. However, this conclusion does not exclude the
positive effect of financial
globalization on financial development. The analysis is
conducted through 108 countries
from 1977 to 2011 in the period 1984–2007 using the
Generalized Method of Moments
(GMM) estimator using panel data. In a more recent article,
Ahmed (2016) studies the
direct and indirect impact of financial globalization on
economic growth through the
channel of financial development. For the sample of 30
countries of sub-Saharan Africa,
his calculations underscore that between 1976 and 2010,
financial opening has not
increased direct growth through the classic channel of capital
accumulation but through
the development of the sample countries’ domestic financial
systems. Lastly, Trabelsi
and Cherif (2017) examined the impact of financial
globalization on financial development
in 90 high-income and middle-income countries during the
period 1980–2009. Their
empirical analysis based on cross-sectional and dynamic panel
(GMM method) highlights
that the positive effect on financial sector and output growth of

freeing cross-border
financial transactions depends on the same institutional
prerequisites. Furthermore,
according to Kose, Prasad, Rogoff, and Wei (2006), in the case
that the effect of
financial globalization on economic growth is mitigated, this
means that not all types
of globalization are beneficial to growth. Even though several
studies prove the positive
effect of FDI and portfolio investments, several other studies
affirm the negative effect
of foreign debts. In this sense, Neto and Veiga (2013) conclude
in the light of their
results that FDI is beneficial to developing countries and that it
is elemental for the
governments of these countries to track the typology of the
capital that they exchange
in order to profit from financial globalization, particularly
given that foreign debts do
not seem to increase the corresponding GDP. The study by Neto
and Veiga (2013) is
42 B. Gaies et al.
DOI: 10.1002/jid
based on a large sample of 139 countries examined during the
period 1970–2009.
Agbloyor, Abor, Adjasi, and Yawson (2014) investigated the
relationship between
private capital flows (FDI, portfolio investment and debts) and
economic growth
between 1990 and 2007 for a panel of 14 African countries.

Using the technique of
instrumental variables and the GMM method, Agbloyor et al.
(2014) draw two main
conclusions. The first is that the three types of flow have a
negative impact on
economic growth in the countries in question. The second is a
nuance of the first: it
stipulates that those countries that have a developed financial
market are able to
transform this negative effect into a positive impact. In the last
group, the
groundbreaking study by Alesina, Grilli, and Milesi-Ferretti
(1994) is one of the earliest
to be cited. The authors conclude that the financial opening can
neither increase nor
decrease growth, looking at 20 countries of the Organization for
Economic Cooperation
and Development between 1950 and 1989. This is confirmed 1
year later by Grilli and
Milesi-Ferretti (1995) in a sample of 61 countries and in a
period spanning from 1966
to 1989 and then by Rodrik (1998) for 100 developed and
developing countries in the
course of the period 1975–1989. Mougani (2012) examines a
sample of 34 African
countries between 1976 and 2009, looking at the specifications
that explain growth
through a combination of economic and institutional control
variables, as well as two
variables of interest, which reflect the financial opening:
private financial flows and
FDI. In line with the other results, the author reveals a positive
impact of financial
opening on growth when the calculations are conducted in time
series. For GMM
estimations, this effect is robust neither in open economies nor

in closed ones, which
leads the author to refute the hypothesis of a positive
correlation between financial
globalization and growth, notably regarding the superiority of
the GMM method when
it comes to relevance (as a result of the potential biases of
endogeneity, which are
linked to the Ordinary Least Squares (OLS) method). Lastly, in
a study conducted with
a dynamic panel consisting of 26 countries of the European
Union between 1990 and
2007 using the difference GMM and GMM system, Gehringer
(2013) finds that
financial liberalization has a positive impact on economic
growth, global productivity
and investment. The result is obtained by the author using a de
jure measure of
financial opening, which is not the case with the de facto
measure. Indeed, Gehringer
(2013) puts forward that it is the political aspect of financial
opening—namely, the
external financial liberalization—and not its quantitative reality
(financial globalization),
which promotes economic growth.
In sum, this literature review supports the non-existence of
empirical consensus on the
effect of financial globalization on growth. This absence of
consensus can explain the
diversity of indicators of financial globalization, of samples and
of periods studied, as well
as the multiplicity of modelization techniques, and of types of
financial globalization. This
being said, recent studies underscore the general tendency to
consider the indirect
(spillover) effects of financial globalization. Additionally, the

global effects—direct
and/or indirect—of financial opening are more robust in the
long term with de facto
measures and dynamic panel data models, as well as with
interaction variables and the
GMM method. Moreover, it is more convenient to demonstrate a
direct and/or indirect
positive effect of financial globalization through FDI and
portfolio investment on growth
than of financial globalization through foreign debt. Lastly, it
has to be noted that the
new tendency of empirical literature is to focus on the indirect
positive effects of financial
globalization (development of the financial system,
improvements in governance) and it
relatively neglects the indirect negative effects that the latter
could have on economic
DOI: 10.1002/jid
growth. This motivates our study of the triplet relationship
between financial globalization,
financial instability and growth.
2.2 Financial Instability and Growth
As supported by Hnatkovska and Loayza (2005) and Rancière,
Tornell, and Westermann
(2008), macroeconomic fluctuations are either of the ‘normal’
or the ‘crisis’ type. The first
are more repetitive in frequency and more long lasting. The

second are more ample and
shorter in duration. According to Cariolle and Goujon (2015),
macroeconomic instability
constitutes the normal fluctuations of macroeconomic variables.
It is traditionally
measured by the deviation of the distribution of a variable
around its mean (absolute
deviation or standard deviation of the growth rate of a variable)
or a trend (residual of
an econometric regression), which then represents the
equilibrium value. By analogue
means, financial instability reflects the normal fluctuations of
financial development and
is distinct from financial crises. More precisely, it can be
considered as an irregularity of
financial development—namely, repetitive fluctuations and
long-lasting financial
development, which are propagating in the long term.
Consequently, financial instability
can be measured by the deviation of the distribution of the
financial development variables
around their means—absolute or standard deviation—or the
trends—residual
(Guillaumont & Kpodar, 2006; Loayza & Rancière, 2006;
Eggoh, 2010).
Furthermore, Aghion et al. (2004) examined in their theoretical
study the phenomenon
of financial instability in a context of free capital circulation.
The authors modelled a
dynamic small open economy model with tradeable goods
produced with capital and a
country-specific factor. In this model, the firms are subject to
credit constraint in order to
finance their projects, without the possibility of a leverage
effect. The dynamic of the

model is the following. In a first movement, the rise in
investment produces a rise in
production and in the most important profits. The increase of
profits permits the firms to
have more credit (they are considered to be more solvent).
While the foreign capital flows
amplify this trend and lead to an investment boom, the
investment boom increases the
demand and so the price of the country specific factor of
production. This mechanism
promotes inflation and generates subsequently a reversed
movement, namely, a decrease
in profits, a reduced solvency of firms, credit crunch, a
contraction of investment and a fall
in production. In consequence, this movement reestablishes the
first phase of investment
boom and price decline of the specific factor of production (the
factor of production is
henceforth less commonly used due to the fall in investment in
the second phase). This
dynamic supports the conclusion on the endogenous character of
financial instability,
whose effects are catalysed by the access to foreign capital
flows, according to Aghion
et al. (2004). In this sense, a crisis would constitute an extreme
case in terms of the
brutality and magnitude of movements of instability. Aghion et
al. (2004) further add that
if the financial system was highly developed, this instability
would be of less importance,
because the firms would still be able to obtain financing for
their investments despite the
fall in profits of the second movement. This is possible due to
the diversity of financial
institutions and the plurality of the domestic and foreign
financial sources in these

economies. Caballé et al. (2006) have drawn the same
conclusions as Aghion et al.
(2004) from a dynamic model of a small open economy. They
have insisted on the
endogeneity of financial instability and on the catalysing role
that foreign debts have in
the development of instability.
44 B. Gaies et al.
DOI: 10.1002/jid
Concerning the effects of financial instability on growth, three
papers have empirically
examined this relationship, namely, Loayza and Rancière
(2006), Guillaumont and
Kpodar (2006) and Eggoh (2010). As a starting point, Loayza
and Rancière (2006)
investigate the inter-linking between financial development and
economic growth in a
sample of 75 developed and developing countries in the period
1960–2004. The results
of their calculations drive them to conclude that financial
development has a positive effect
on economic growth in the long term. However, in the short
term, this effect is negative.
These two authors explain this result by the means of financial
stability, which they
measure by the recurrence of financial crises and by the
instability of the indicator of
financial development. Just like Loayza and Rancière (2006),
Guillaumont and Kpodar
(2006) study financial instability as a collateral phenomenon to

financial development that
influences the process of economic growth. The main results
that they find for a sample of
120 developing countries indicate that financial development is
one of the factors that
explains financial instability in an inflationary context. It acts
negatively on growth among
others, by reducing the positive impact of financial development
on the latter, but without
offsetting it completely. In a more recent study, Eggoh (2010)
estimates a growth model in
cross section, and in a second step in panel data, which
simultaneously integrates
indicators of financial development and of financial instability
as variables of interest for
a hybrid sample of 75 developed and developing countries in the
period 1960–2004.
The deductions of Eggoh (2010) agree with those of
Guillaumont and Kpodar (2006).
3 DATA
To quantify the links between financial globalization, financial
instability and economic
growth in developing countries, we are basing our study on an
unbalanced panel of 72
countries among low-income and middle-income countries
according to the World Bank
classification.2 As is now standard in growth regression
literature (see, e.g. Loayza and
Rancière, 2006; Aghion, Bacchetta, Rancière, & Rogoff, 2009;
Neto & Veiga, 2013;
Ahmed, 2016), we construct our panel data set by transforming
our time series data
between 1972 and 2011 into a 5-year average.3 This method is
used to eliminate

business-cycle fluctuations in order to focus on long-term
growth effects (Temple,
1999). It is also useful to capture considerable variation and is
less noisy compared with
annual rates (Bhargava, Jamison, Lau, & Murray, 2001). We
consider a standard growth
regression model, as is traditionally implemented in literature
(see, e.g. Barro & Sala-I-
Martin, 2004). The dependent variable is the growth rate of the
real GDP per capita
(GDPPCG). It is explained by the indicators of financial
globalization, of financial
instability and of control variables.4
2The World Bank considers that a country is low-income if its
GNI per capita is lower than or equal to US$935. A
country is considered to have lower average income if its GNI
per capita is no less than US$936 and no more than
US$3705; a country has a higher average income if its GNI per
capita is between US$3706 and US$11 455; and a
country is at higher income if its GNI per capita exceeds US$11
456 (http://data.worldbank.org/about/country-
classifications/country-and-lending-groups).
3The transformation results in eight non-overlapping sub-
periods: 1972–1976, 1977–1981, 1982–1986, 1987–
1991, 1992–1996, 1997–2001, 2002–2006 and 2007–2011. The
variables of financial instability are calculated
in terms of standard deviation and absolute deviation over 5
years.
4Variables and sources are described in Table A12. Summary
statistics can be found in Table A13; correlation
coefficients are in Table A14.

DOI: 10.1002/jid
http://data.worldbank.org/about/country-classifications/country-
and-lending-groups
http://data.worldbank.org/about/country-classifications/country-
and-lending-groups
3.1 Indicators of Financial Globalization
Our indicators of financial globalization are extracted from the
database of Lane and
Milesi-Ferretti (2007), updated in 2011 (the last update).
OPGLG is the indicator of
financial globalization. It constitutes the growth rate of total
stocks of external FDI,
portfolio equity and debt, assets and liabilities. INVOPGLG is
the indicator of
investment-globalization. It is the growth rate of total stocks of
external FDI and
portfolio equity, assets and liabilities. OPENDEB is the
indicator of indebtedness-
globalization. It is the growth rate of total stocks of external
debt, assets and liabilities.
The use of these indicators is recommended by Kose et al.
(2006). The authors stress that
it is more beneficial to use this kind of indicator (de facto
measure), because the latter
account for the reality of the impact of financial globalization
rather than the degree of
liberalization of the capital account (de jure measure).
Moreover, Baltagi, Demetriades,
and Law (2009) argue that the endogeneity bias is more
important for de jure indicators,
reflecting a policy choice of financial opening, than de facto
indicators of financial

globalization.
3.2 Indicators of Financial Instability
The indicators of financial instability are INBANK and INLIQ.
INBANK constitutes the 5-
year average absolute deviation of the growth rate of deposit
money bank assets to total
bank assets (deposit money plus central). INLIQ is the 5-year
average absolute deviation
of the growth rate of liquid liabilities to the GDP. These two
instability are calculated with the use of the formula Vx1 ¼
1
5
∑
5
t¼1
gxt � gx
�� . VX1 constitutes
the measure of financial instability INBANK or INLIQ,
considering that gxt is the growth
rate of deposit money bank assets to (deposit money + central)
bank assets (BANK) or the
growth rate of liquid liabilities to GDP (LIQ), taken from the
database of Beck and
Demirgüç-Kunt (2009), updated in April 2013. Since the
pioneering work of King and
Levine (1992), LIQ reflects the size of a financial system and
its depth, and BANK
indicates the importance of commercial banks in the economy in
relation to the central

bank (Sahay et al., 2015).
3.3 Control Variables
The control variables are extracted from the World Bank
database. These are lagged real
GDP per capita (L.GDPPC), trade openness (TRADE),
education (EDU), terms-of-trade
growth (TERM) and government size (GOV). They are selected
in accordance with
several studies on the phenomenon of economic growth, because
they have been proven
robust, namely, by Sala-I-Martin (1997), Barro and Sala-I-
Martin (2004) and Sala-I-
Martin, Doppelhofer, and Miller (2004). These variables are
also used by the recent
empirical literature on financial globalization and financial
development (see, e.g.
Aghion et al., 2009; Neto & Veiga, 2013; Estrada et al., 2015;
Ahmed, 2016; Trabelsi
& Cherif, 2017).
46 B. Gaies et al.
DOI: 10.1002/jid
4 EMPIRICAL ANALYSIS
4.1 Estimated Models
We examine the direct effect on growth of financial
globalization and financial instability
measures. Then we look at the impact of interaction between

these measures of growth.
More specifically, we test two models: Equation (1) tests the
direct effect and Equation (2)
tests the indirect (spillover) effect.
ΔYit ¼ α0 þ γY it�1 þ α1 int1it þ α2int2it þ β
0
X it þ μi þ λt þ εit (1)
ΔY it ¼ α0 þ γYit�1 þ α1int2it þ α2 int1it� int2itð Þ þ β
0
X it þ μi þ λt þ εit; (2)
where ΔYit = Yit – Yit�1 is the growth rate of real GDP per
capita (GDPPCG); Yit�1 is the
lagged real GDP per capita (L.GDPPC); int1it represents the
globalization (OPGLG or INVOPGLG or OPENDEB); int2it
represents the indicators of
financial instability (INBANK or INLIQ); int1it * int2it
represents an interaction term
between financial globalization measures and financial
instability measures; Xit regroups
the set of control variables (TRADE, EDU, TERM and GOV);
α0 is a constant; μi is the
country-specific effect; λt is the time-specific effect; and εit is
the error term.
According to Equation (2), the marginal effect of financial
instability of growth is
obtained through calculation of the partial derivative of the
growth rate of the real GDP
per capita on the indicator of financial instability, which reads
as follows:
d ΔYð Þit

d int2ð Þit
¼ α1 þ α2 int1it: (3)
If α1 and α2 are both positive (negative), the financial
instability measures have a
positive (negative) effect on economic growth, and financial
globalization measures
amplify this impact. If α1 > 0 and α2 < 0, the financial
instability measures have a
positive effect on economic growth, although the financial
globalization measures reduce
this impact; if α1 < 0 and α2 > 0, the financial instability
measures have a negative
effect on economic growth, although the financial globalization
measures reduce this
impact.
4.2 Estimation Method
We use the GMM5 system dynamic panel data estimator
developed in Arellano and Bond
(1991), Arellano and Bover (1995) and Blundell and Bond
(1998), and we compute
5The use of the Generalized Method of Moments (GMM) system
method constitutes a strong point of the
empirical investigations based on the dynamic panel data,
because of its superiority to traditionally employed
methods (e.g. OLS, Generalized Least Squares (GLS), Quasi
Least Squares (QLS), within estimator and between
estimator) because it provides the advantage of controlling the
endogeneity of explanatory variables, such as the
lagged dependent variable, generating internal instruments
(Arellano & Bond, 1991; Arellano & Bover, 1995;
Blundell & Bond, 1998; Roodman, 2009a, 2009b).

DOI: 10.1002/jid
robust two-step6 standard errors by following the methodology
proposed by Windmeijer
(2005).7
This method permits us to resolve the potential problem of
endogeneity of explanatory
variables. Moreover, in our models, the explanatory variables,
including the initial level of
real GDP per capita, are of a macroeconomic and institutional
nature, hence constituting a
risk of evoking inverse causality with growth. These variables
may not be fully exogenous,
and causality may run in both directions. This method also
allows us to resolve the
potential bias related to possible correlation between country-
fixed effects and the
explanatory variables. In addition, the individual dimension of
our panel—which is
relatively larger than its temporal dimension (small T, large
N)—justifies the choice of
the GMM system estimator in two stages (Roodman, 2009a,
2009b). The GMM system
estimator is used in the most recent panel studies on the
financial development (see, e.g. Aghion et al., 2009; Neto &
Veiga, 2013; Estrada et al.,
2015; Ahmed, 2016; Trabelsi & Cherif, 2017). The validity of
the GMM system estimator

is conditioned upon the exogeneity of the instruments (Hansen
test of over-identifying
restrictions: Hansen test) (Hansen, 1982), as well as no
autocorrelation of errors of order
2 (Arellano–Bond test: AR2) (Arellano & Bond, 1991; Arellano
& Bover, 1995; Blundell
& Bond, 1998). All of these tests confirm the validity of our
estimates.
4.3 Basic Results
In Table 1, the coefficients of the indicators of financial
instability (INBANK and INLIQ)
are statistically significant and negative in all of the regressions
(1), (2), (3), (4), (5) and
(6). This leads us to conclude that the direct impact of financial
instability on growth is
negative. Also, this result confirms the conclusions of the
theoretical models of Aghion
et al. (2004) and Caballé et al. (2006) that demonstrate the
negative impact of financial
instability on firm profits and investment.
The coefficients linked to the indicator of financial
globalization (OPGLG) being
positive in regressions (1) and (4) bear witness to the positive
direct impact of financial
globalization on growth. The same observation in regressions
(2) and (5) applies to the
indicator of investment-globalization (INVOPGLG). Also, as
can be observed in
regressions (3) and (6), the negativity of the coefficients related
to the measure of
indebtedness-globalization (OPENDEB) indicates that this type
of globalization
decreases the real GDP per capita growth. The beneficial effect

of investment-
globalization can be explained by the crowding effect between
domestic and foreign
6A first estimation revolves around the hypothesis of the
absence of an errors’ correlation and the
homoscedasticity of errors. In a second step of the calculation,
the vector of residuals derived from this first
estimation is used to assess a variance–covariance matrix of
errors in a convergent manner. At this second stage,
the hypothesis of the absence of the errors’ correlation and of
the homoscedasticity of errors is being verified. This
leads to the GMM estimator that is being assessed in two stages,
which is more efficient than the GMM estimator
assessed in one step, especially for the GMM system (Roodman,
2009a, 2009b).
7All of our regressions are estimated with Stata 12, in which the
GMM system method is preprogrammed
(commands: xtabond2 and twostep robust). Additionally, we
base the writing of our commands in relation to
our assessments on the recommendations of Roodman (2009a,
2009b) and Newey and Windmeijer (2009),
including application of the correction by Windmeijer (2005).
Through the use of Stata 12, the command collapse
guarantees a small number of instruments which does not
exceed the number of observations, enabling us to
assess the model in an unbiased manner, which potentially
prevents the problem of instrument proliferation
(Roodman, 2009a, 2009b). Indeed, with a number of instruments
that is too large and surpasses the number of
observations, the endogenous variables can be overrepresented
through their instruments, evoking the risk of a
persisting problem of endogeneity.
48 B. Gaies et al.

DOI: 10.1002/jid
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.
DOI: 10.1002/jid
investment, as well as a technology transfer (see, e.g.
Borensztein, De Gregorio, & Lee,
1998). On the other hand, the negative direct effect of
indebtedness-globalization may
go back to the potential indebtedness problems—especially
repayment of debt—related
to this type of globalization (see, e.g. Obstfeld, 1998; Broner,
Martin, & Ventura,
2010).
Furthermore, the negativity of the coefficient’s sign of lagged
GDP per capital (L.
GDPPC) is in line with teachings about the conditional-
convergence framework. The
positive sign of the coefficient of trade openness (TRADE)
corresponds with fundamental
theses of classical international trade theory. The negative sign

of the coefficient of the
indicator of government size (GOV) is also in line with public
choice theory. The
indicators of education (EDU) and the terms-of-trade growth
(TERM) appear little
explanatory with regard to growth of the real GDP per capita in
the countries of our sample
between 1972 and 2011.
According to Table 2, the coefficients of the terms of
interaction between financial
globalization and financial instability (INLIQ × OPGLG and
INBANK × OPGLG) are
positive in regressions (1) and (4). In consequence, the marginal
negative effect of
financial instability on growth decreases with a higher level of
financial globalization.
More precisely, the positive impact of the latter on the real GDP
per capita
counterbalances the negative effect of instability. Hence, it
seems that financial
globalization also allows a spillover (indirect) positive effect on
growth. This effect
may be the decrease of financial instability’s harmful effect on
growth in developing
countries.
On the other hand, and still according to Table 2, the terms of
interaction between
investment-globalization and financial instability (INBANK ×
INVOPGLG and
INLIQ × INVOPGLG) also have coefficients with a positive
sign, suggesting that
investment-globalization decreases financial instability’s
harmful effect on economic
growth. It hence indirectly and positively influences economic

growth. Conversely,
the interaction terms between indebtedness-globalization and
financial instability
(INBANK × OPENDEB and INLIQ × OPENDEB) show a
coefficient with a negative
sign. This means that the negative impact of financial instability
on real GDP per capita
growth is amplified by a stronger indebtedness-globalization.
This type of globalization
allows an indirect negative effect on growth, increasing the
harmful effect of financial
instability. The negative spillover effect of indebtedness-
globalization on growth via
financial instability confirms the conclusions of the theoretical
models by Aghion
et al. (2004) and Caballé et al. (2006). Let us recall that these
models show the robust
theoretical relationship between the movements of foreign
capital flows—especially
debt flows—and credit instability. In addition, a number of
studies proved that the
foreign debt flows are often synonymous with agency problems,
risks and crises in
the domestic financial system (see, e.g. Rodrik & Subramanian,
2009; Joyce, 2011;
Lane & McQuade, 2014). Besides, the literature on spillover
effects of financial
globalization attributes the development of the domestic
financial system to foreign
investment flows rather than foreign debt flows (see, e.g. Kose
et al. (2006)). On this
basis, we can explain the positive spillover effect of
investment-globalization on growth
via financial instability as follows: It is because investment-
globalization indirectly
promotes financial development that it lowers the negative

effect of financial instability
on growth.
Moreover, as is the case for the regressions of Table 1, the signs
of the coefficients of
those control variables are significant, consistent with basic
economics theories.
50 B. Gaies et al.
DOI: 10.1002/jid
T
ab
le
2
.
F
in
an
ci
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DOI: 10.1002/jid
4.4 Robustness Test
We subject our main empirical findings to a set of tests to
validate their robustness. These
tests consist of the insertion of alternative variables of financial
instability, the inclusion of
new control variables, inter alia an indicator of banking crises,
using different time periods,
and changing the composition of the basic sample.
4.4.1 Alternative variables of financial instability
We have calculated two other alternative indicators of financial
instability, taking the
indicators of financial development (LIQ and BANK).
INBANKR and INLIQR constitute
the 5-year average absolute value of residual εt. They are
calculated in the following
formula:
Vx2 ¼
1
5
∑
5
t¼1
εtj j; (4)

where VX2 constitutes the measure of financial instability
INBANK or INLIQ and εt is the
pooled OLS estimated residual of the following regression:
xt ¼ a þ bxt�1 þ ct þ εt; (5)
where x is BANK or LIQ, a is a constant and t is the time. This
regression is estimated
separately for every country in the sample.
Table A1 presents the results of the estimates run on Model 1
through the introduction
of new alternative variables of financial instability (INBANKR
and INLIQR). It shows the
negative impact of financial instability on real GDP growth per
capita. The indicators of
financial globalization and of investment-globalization (OPGLG
and INVOPGLG) have
positive coefficients. This confirms their positive impact on
economic growth. However,
the coefficients linked to the indicator of indebtedness-
globalization (OPENDEB) are
negative in Table A1. This type of globalization has a harmful
effect on the growth of
the real GDP. These results and the ensuing interpretations
confirm those in Table 1. Also,
the control variables keep the same signs and almost the same
significance as those of the
estimates in Table 1.
The results in Table A2 equally confirm those in Table 2. The
coefficients of the terms
of interaction between the variables of financial instability and
financial globalization, as
well as investment-globalization (INLIQR × OPGLG,
INBANKR × OPGLG,
INBANKR × INVOPGLG and INLIQR × INVOPGLG), bear

positive signs. In contrast,
the coefficients of the terms of interaction between the variables
of financial instability
and indebtedness-globalization (INLIQR × OPENDEB and
INBANKR × OPENDEB)
are negative. Consequently, the two main conclusions drawn
from our estimates on the
basis of Model 2 regarding Table 2 are consolidated at this
point. The first constitutes
the spillover (indirect) positive impact of financial
globalization and investment-
globalization on growth via the decrease in the harmful effect of
financial instability.
The second conclusion is that indebtedness-globalization
increases this effect and lowers
the GDP growth per capita. Furthermore, the coefficients of
control variables keep the
signs and the significances of the estimates in Table 2.
According to Tables A1 and A2, it has to be noted that the
replacement of the indicators
of financial instability with other variables has not significantly
undermined the stability of
our baseline estimates. That being said, what happens if we
insert the variables of financial
52 B. Gaies et al.
DOI: 10.1002/jid
instability from a different calculation method and from a new
indicator of financial
development?

We consider the two following indicators of financial
development: the financial
system deposits to the GDP (DEV) and deposit money bank
assets to the GDP
(DEBA). Thereafter, we calculate8 the indicators of financial
instability INDEV and
INDEBA.
Firstly, INDEV is the 5-year standard deviation of the log-
difference of DEV. It is
calculated in the following formula:
INDEV ¼
ffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
ffiffiffiffi
∑
5
t¼1
gxt � gx
� �2
;
s
(6)
where gxt is the log-difference of DEV, extracted from the
database of Beck and Demirgüç-
Kunt (2009), updated in April 2013.
Secondly, INDEBA is the 5-year standard deviation of value of
residual εt. It is
calculated in the following formula:

INDEBA ¼
ffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
∑
5
t¼1
1
5
εt2;
s
(7)
where εt is the pooled OLS estimated residual of the following
regression:
xt ¼ a þ bxt�1 þ ct þ εt; (8)
where x is DEBA, extracted from the database of Beck and
Demirgüç-Kunt (2009),
updated in April 2013, a is a constant and t is the time. This
regression is estimated
separately for every country in the sample.
Tables A3 and A4 also confirm our main empirical findings.
The signs of the
coefficients associated with the variables of financial
globalization and the alternative
indicators of financial instability, as well as those of interaction
terms, support the fact that
financial globalization and investment-globalization positively
and significantly affect
growth directly and indirectly. In contrast, indebtedness-
globalization seems to be harmful
to the latter, directly as well as indirectly.

4.4.2 Adding control variables
In Table A5, we have kept Models 1 and 2, adding three new
control variables. They are
the banking crisis dummy (CRISIS), the population growth
(POPG) and the political rights
indicator of Freedom House (POL). Eichengreen, Gullapalli,
and Panizza (2011) support
that financial opening develops the financial system but
generates financial crises. In
consequence, the resumption of our main empirical results, after
controlling the variable
of the banking crises and of other variables, risks causing a
decrease in the significance
of the coefficients of financial instability’s variables and the
terms of interaction. However,
Table A5 highlights the opposite. It confirms our main
empirical findings after adding new
variables. Moreover, this supports our distinction between
financial crisis and financial
8These calculation methods are equally used to measure
macroeconomic instability in general, just like the other
exposed methods. For more detail, see Cariolle and Goujon
(2015).
DOI: 10.1002/jid
instability. Indeed, the impact of financial instability on growth
has not been nullified by
the presence of the indicator of crisis, which is significant.

Thus, financial instability can
trigger a crisis, but it is important not to amalgamate the two.
4.4.3 Changing of the estimation period
In order to see if the results stay valid in other temporal
horizons, we estimate again
Models 1 and 2 for the three following sub-periods: 1972–2001
and 2007–2011, 1972–
2007 and then 1972–2001. In a first step, we have eliminated
the data related to the sub-
period of 2002–2006. In this sub-period, the process of financial
globalization saw a
worldwide boom since 1972 (International Monetary Fund,
2012). In a second step, we
have considered the sub-period 1972–2007 in isolation. Indeed,
in contrast to the sub-
period of 2002–2006, the sub-period of 2007–2011 corresponds
to a sharp decline in the
exchange of financial flows (International Monetary Fund,
2012) after the international
financial crisis in 2008. In a third step, we have eliminated the
sub-period 2002–2011. This
sub-period presents two strong movements of acceleration and
deceleration of the
phenomenon of financial globalization. From Tables A6, A7,
A8, the stability of our
conclusions for the investigated different time periods becomes
obvious. The signs and
the coefficients’ significance associated with the variables of
financial globalization,
financial instability and the terms of interaction are consistent
with those in Table 1 and
2 for the periods 1972–2001 and 2007–2011, 1972–2007 and
1972–2001.
4.4.4 Changing of the composition of the sample

Tables A9 and A10 highlight that our main results are stable
and significant, once again,
after the successively elimination of two subgroups of our basic
sample. The first subgroup
(subgroup 1) includes the countries that belong to the three
‘continents’ according to the
World Bank classifications, namely, East Asia and Pacific,
Europe and Central Asia, and
South Asia. The second subgroup eliminated (subgroup 2)
includes the countries that
belong to the category of Latin America and the Caribbean, also
according to the World
Bank classifications.
Similarly, Table A11 confirms our main empirical findings after
excluding the data of
five countries to our basic sample: Egypt, Pakistan, India,
Indonesia and the Philippines.
We have removed these countries, because they are classified as
emerging markets by
Morgan Stanley Capital International 2018 indices.
5 CONCLUSION AND POLICY RECOMMENDATIONS
This article examines the effect on long-term growth of
financial instability, independently and in interaction for a
panel of 72 developing
countries in the period 1972–2011. Two dynamic panel models
are estimated through
the GMM system. The calculations have proved to be robust in a
series of tests consisting
of the insertion of alternative variables of financial instability,
the inclusion of new control
variables, inter alia an indicator of banking crises, using
different time periods, and

changing the composition of the sample. We obtain four main
results.
In the first place, financial instability has a negative effect on
economic growth. Second,
not only does investment-globalization have a direct positive
effect on growth but also has
an additional spillover and positive effect, reducing the negative
impact of financial
instability. Furthermore, in contrast, not only does
indebtedness-globalization have a direct
54 B. Gaies et al.
DOI: 10.1002/jid
negative effect on growth but also has a spillover and negative
effect, increasing the
negative impact of financial instability on growth. Lastly, in
sum, financial globalization
(investment-globalization plus indebtedness-globalization)
positively influences growth
directly and collaterally through its interaction with financial
instability.
In the light of these findings, it seems that investment-
globalization is more
interesting for developing countries than indebtedness-
globalization. The latter risks
being counterproductive to the financing of a country’s
economy. This emphasizes
the importance of evoking the potential utility of a regulation in
the sense of a control

on foreign capital apart from portfolio investments and FDIs.
This is not an easy thing
to do for at least two reasons. First of all, the least developed
countries generally need
foreign debts in order to finance at least their short-term
development because of the
insufficiency of domestic savings being mobilized for this
purpose. Consequently, even
if this type of opening harms their growth in the long run, it is
often a ‘necessary evil’
in the short and medium term. Secondly, indebtedness-
globalization is easier to
implement in developing countries than investment-
globalization. Indeed, because of
the weakness of their financial risk management system and the
relative uncertainty
of their institutional and politico-economic framework, for
these countries, it often is
more difficult to attract foreign investments than foreign debts.
Moreover, financial
development constitutes a condition that is necessary but
insufficient for the financing
of these countries’ growth. The regularity of the financing is
crucial to long-term
economic growth, because its absence can be counterproductive.
To achieve this
regularity, the liberalization of the financial sphere must be
supervised and accompanied
by institutional reforms, especially regarding property rights,
legal system and
anti-corruption measures. The foreign investments may be
advancing these reforms
(for more details, see, e.g. Mishkin, 2009).
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A. APPENDIX
A.1. LIST OF COUNTRY
A.1.1. Basic sample (72 countries)
Albania, Chad, Georgia, Kiribati, Niger, Sudan, Armenia,
Comoros, Ghana, Lesotho,
Nigeria, Swaziland, Bangladesh, Rep. Demo of Congo,
Guatemala, Liberia, Pakistan
Rep., Syria, Belize, Republic of Congo, Guinea, Madagascar,
Papua New Guinea,
Tajikistan, Benin, Côte d’Ivoire, Guinea-Bissau, Malawi,
Paraguay, Tanzania, Bhutan,
Djibouti, Guyana, Mali, Philippines, Tonga, Bolivia, Egypt,
Haiti, Mauritania, Rwanda,
Uganda, Burkina Faso, Salvador, Honduras, Moldova, Samoa,
Uzbekistan, Burundi,
Eritrea, India, Mongolia, Senegal, Vanuatu, Cambodia,
Ethiopia, Indonesia,
Mozambique, Sierra Leone, Vietnam, Cameroon, Fiji, Iraq,
Nepal, Solomon Islands,

Zambia Rep., Central African Republic, Gambia, Kenya,
Nicaragua, Sri Lanka and
Zimbabwe.
A.1.2. East Asia and Pacific (12 countries)
Cambodia, Fiji, Indonesia, Kiribati, Mongolia, Papua New
Guinea, Philippines, Samoa,
Solomon Islands, Tonga, Vanuatu and Vietnam.
A.1.3. Europe and Central Asia (seven countries)
Albania, Armenia, Georgia, Moldova, Tajikistan, Uzbekistan
and Belize.
A.1.4. South Asia (six countries)
Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka.
A.1.5. Latin America and The Caribbean (eight countries)
Bolivia, El Salvador, Guatemala, Guyana, Haiti, Honduras,
Nicaragua and Paraguay.
A.1.6. Middle East and North Africa (four countries)
Djibouti, Egypt, Iraq and Syrian Arab Republic.
A.1.7. Sub-Saharan Africa (35 countries)
Benin, Burkina Faso, Burundi, Cameroon, Central African Rep.,
Chad, Comoros, Congo.
Dem. Rep. of, Congo. Republic of, Côte d’Ivoire, Eritrea,
Ethiopia, Gambia. The, Ghana,
Guinea, Guinea Bissau, Kenya, Lesotho, Liberia, Madagascar,
Malawi, Mali, Mauritania,
Mozambique, Niger, Nigeria, Rwanda, Senegal, Sierra Leone,

Sudan, Swaziland,
Tanzania, Uganda, Zambia and Zimbabwe.
58 B. Gaies et al.
DOI: 10.1002/jid
T
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ts
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ar
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o
f
in
te
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d
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th
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fr
o
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.
DOI: 10.1002/jid
T
ab
le
A
2
.
F
in
an
ci
al
g
lo
b
al
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at
io
n

,
fi
n
an
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al
in
st
ab
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it
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d
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ro
w
th
:
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in
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ap
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(r
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u

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es
s:
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)
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)
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(3
)

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(4
)
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en
t
v
ar
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b
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:
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ro
w
th
ra
te
o
f
re
al
G
D
P
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ca
pi
ta
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io
d:
1
9
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–
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0
1
1
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v
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la
p
p
in
g
5
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r
d
at
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st
im

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io
n
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st
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en
er
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et
h
od
o
f
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o
m
en
ts
w
it
h

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in
d
m
ei
je
r
(2
0
05
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al
l
sa
m
p
le
ro
b
u
st
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rr
ec
ti
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n
.
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im
e

an
d
fi
x
ed
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fe
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l
th
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re
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ta
n
d
ar
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er

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te
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e
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ci
en
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nt
.
60 B. Gaies et al.
DOI: 10.1002/jid
T
ab
le
A

3
.
F
in
an
ci
al
g
lo
b
al
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at
io
n
,
fi
n
an
ci
al
in
st
ab
il
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y
an
d
g
ro
w
th

:
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d
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st
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s:
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te
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n

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DOI: 10.1002/jid
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62 B. Gaies et al.
DOI: 10.1002/jid
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DOI: 10.1002/jid
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Exam #3 ReviewChapter 10· Balance of payment statements · .docx

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