Interest rates, savings, investment and growth in Mexico 1960-90: tests of the financial liberalisation hypothesis

The hypothesis that rising real interest rates induce more saving and investment and therefore act as a positive stimulus to economic growth is tested for Mexico in 1960-1990, making the important distinction between financial saving and total saving. It is concluded that any favourable effect of fi...

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Bibliographic Details
Published in:The Journal of development studies 1994-04, Vol.30 (3), p.629-649
Main Authors: Warman, Fanny, Thirlwall, A P
Format: Article
Language:English
Online Access:Get full text
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Summary:The hypothesis that rising real interest rates induce more saving and investment and therefore act as a positive stimulus to economic growth is tested for Mexico in 1960-1990, making the important distinction between financial saving and total saving. It is concluded that any favourable effect of financial liberalisation and higher real interest rates on economic growth must come through raising the productivity of investment. (Original abstract - amended)
ISSN:0022-0388