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Girma, Abebe Gule: The Role of Financial Development in Post-War Economic Growth
When the condition of the dummy variable is absent (dummy=0), which is β1+ β2
(∂RGDPG/∂FD = β1+ β2).
When condition dummy is present such as pre-war exist (pre-war=1) the effect of one
unit change in FD on RGDPG is β1 + β2+ β3 (∂RGDPG/∂FD = β1 + β2+ β3).
There are war dummies (War = 1) the effect of one unit change in FD on RGDPG is
β1 + β2+ β4 (∂RGDPG/∂FD = β1 + β2+ β4).
There are post war dummies (post-war = 1) the effect of one unit change in FD on
RGDPG is β1 + β2+ β5 (∂RGDPG/∂FD = β1 + β2+ β5).
*We use log value for official expenditure, central government debt and gross national
expenditure variables.
Variable description, measurement, and data source
No Variable Id Variable name Measurement Data source
Dependent variable
1 RGDPG Economic growth Annual real GDP per capita World bank
growth data base
Study variable
2 FD Financial Domestic credit provided to World bank
development private sector %GDP data base
Monetary control variables
3 Off exc Official exchange Rate of Local currency World bank
rate exchange by dollars data base
4 Ms. Money supply Annual growth of the broad World bank
money supply annual data base
growth
5 LIR Interest rate Lending interest rate World bank
data base
Control variables
6 GNEXP Expenditure Gross national expenditure World bank
data base
7 C.govt debt Debt Central government debt World bank
data base
8 D.Saving Saving Domestic saving rate World bank
data base
9 Trade Trade openness Trade %GDP World bank
data base
10 FDI Foreign direct Foreign direct investment World Bank
investment net inflows %GDP data base.
11 Aid Aid effectiveness Net ODA received per World bank
capita data base
Source: Authors construction based on literature review
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