Foreign liquidity, economic openning and growth in Latin American economies

Abstract

The main concern of our empirical study is to shed light on the question of whether or not and in which direction long-term growth has been associated with financial (liquidity) and trade opening since early the 1970s using a panel data approach for 11 Latin American countries. Previous empirical studies reported mixed results in terms of finding a stable association between capital account liberalization and growth or even for trade opening and growth. Our empirical results suggest an important link between international liquidity and growth, but the same does not apply for trade opening and growth.