Growth volatility and resource curse: Does financial development dampen the oil shocks?

We assess whether well-developed financial system can moderate the positive association between oil volatility and growth volatility. Using a core sample of 63 oil-producing countries over the period 2000–2010, the empirical analysis confirms a negative link between oil terms of trade volatility and...

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Bibliographic Details
Published in:Resources policy 2016-06, Vol.48, p.97-103
Main Authors: Moradbeigi, Maryam, Law, Siong Hook
Format: Article
Language:English
Subjects:
Empirical analysis
Financial development
Growth volatility
Links
Oil volatility
Policies
Volatility
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Summary:We assess whether well-developed financial system can moderate the positive association between oil volatility and growth volatility. Using a core sample of 63 oil-producing countries over the period 2000–2010, the empirical analysis confirms a negative link between oil terms of trade volatility and growth volatility. In addition, we find evidence that financial development dampens the effect of oil terms of trade volatility. •We examine the effect of oil volatility on growth volatility.•We examine the role of financial development in the relationship between oil volatility and growth volatility.•We employ the dynamic panel data technique to capture the past effects of growth volatility.•The empirical result confirms a negative link between oil terms of trade volatility and growth volatility.•More developed financial markets offset the negative effects of oil terms of trade volatility on growth volatility.
ISSN:0301-4207
1873-7641
DOI:10.1016/j.resourpol.2016.02.009