Old Wine in a New Bottle: Are Financial Variables Omitted Variables in the Production Function?

13 Pages Posted: 15 Jun 2007

See all articles by Nicholas Apergis

Nicholas Apergis

University of Piraeus; University of Derby

Date Written: April 2007

Abstract

This paper examines the role of financial variables in the production function by making use of nonlinear regressions along with panel data techniques and a G7 data panel set. It offers a non-linear GMM estimator that makes use of instruments that exploit information from the levels of the variables in the production function, while it uses both one-level and two-level bootstraps to check whether the estimates are supported by the data. The results suggest that both money and credit aggregates enter significantly the aggregate production function as an input, indicating that both variables seem to facilitate the process of production.

Keywords: money, credit, production function, GMM estimations, G7 panel

JEL Classification: E23, E51

Suggested Citation

Apergis, Nicholas, Old Wine in a New Bottle: Are Financial Variables Omitted Variables in the Production Function? (April 2007). Available at SSRN: https://ssrn.com/abstract=994141 or http://dx.doi.org/10.2139/ssrn.994141

Nicholas Apergis (Contact Author)

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

University of Derby ( email )

Kedleston Road
Derby, Derbyshire DE22 1GB
United Kingdom

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