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There is now a substantial theoretical literature arguing that inflation impedes financial deepening. Furthermore, it has been hypothesized that the relationship is a nonlinear one, in that there is a threshold level of inflation below which inflation has a positive effect on financial depth, but above which the effect turns negative. Using a large cross-country sample, empirical support is found for the existence of such a threshold. The estimates indicate that the threshold level of inflation is generally between 3 and 6 percent a year, depending on the specific measure of financial depth that is used.

Econometrics --- Finance: General --- Inflation --- Price Level --- Deflation --- Financial Markets and the Macroeconomy --- General Financial Markets: General (includes Measurement and Data) --- Truncated and Censored Models --- Switching Regression Models --- Threshold Regression Models --- Macroeconomics --- Finance --- Econometrics & economic statistics --- Stock markets --- Financial sector development --- Market capitalization --- Threshold analysis --- Prices --- Financial services industry --- Stock exchanges

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Using a novel empirical approach and an extensive dataset developed by the Fiscal Affairs Department of the IMF, we find no evidence of any particular debt threshold above which medium-term growth prospects are dramatically compromised. Furthermore, we find the debt trajectory can be as important as the debt level in understanding future growth prospects, since countries with high but declining debt appear to grow equally as fast as countries with lower debt. Notwithstanding this, we find some evidence that higher debt is associated with a higher degree of output volatility.

Debts, Public --- Default (Finance) --- Economic development --- Finance --- Finance, Public --- Repudiation --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Econometric models. --- Econometrics --- Public Finance --- Debt Management --- Sovereign Debt --- Economic Growth and Aggregate Productivity: General --- Truncated and Censored Models --- Switching Regression Models --- Threshold Regression Models --- Public finance & taxation --- Econometrics & economic statistics --- Threshold analysis --- Econometric analysis --- Japan

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This paper examines whether a tipping point exists for real GDP growth in Italy above which the ratio of non-performing loans (NPLs) to total loans falls significantly. Estimating a heterogeneous dynamic panel-threshold model with data on 17 Italian regions over the period 1997–2014, we provide evidence for the presence of growth-threshold effects on the NPL ratio in Italy. More specifically, we find that real GDP growth above 1.2 percent, if sustained for a number of years, is associated with a significant decline in the NPLs ratio. Achieving such growth rates requires decisively tackling long-standing structural rigidities and improving the quality of fiscal policy. Given the modest potential growth outlook, however, under which banks are likely to struggle to grow out of their NPL overhang, further policy measures are needed to put the NPL ratio on a firm downward path over the medium term.

Financial crises. --- Financial crises --- Crashes, Financial --- Crises, Financial --- Financial crashes --- Financial panics --- Panics (Finance) --- Stock exchange crashes --- Stock market panics --- Crises --- Econometrics --- Finance: General --- Industries: Financial Services --- 'Panel Data Models --- Spatio-temporal Models' --- Financial Markets and the Macroeconomy --- Bankruptcy --- Liquidation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Truncated and Censored Models --- Switching Regression Models --- Threshold Regression Models --- General Financial Markets: Government Policy and Regulation --- Finance --- Econometrics & economic statistics --- Nonperforming loans --- Threshold analysis --- Distressed assets --- Financial institutions --- Econometric analysis --- Financial sector policy and analysis --- Loans --- Banks and banking --- Italy --- Panel Data Models --- Spatio-temporal Models

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Panel data on Ghanaian manufacturing firms are used to test predictions from models of irreversible investment under uncertainty. Information on the entrepreneur’s subjective probability distribution over future demand for the firm’s products is used to construct the expected variance of demand, which is used as a measure of uncertainty. Empirical results support the prediction that firms wait to invest until the marginal revenue product of capital reaches a firm-specific hurdle level. Moreover, higher uncertainty raises the hurdle level that triggers investment, and uncertainty has a negative effect on investment levels that is greater for firms with more irreversible investment.

Banks and Banking --- Econometrics --- Investments: General --- Investments: Stocks --- Industries: Manufacturing --- Criteria for Decision-Making under Risk and Uncertainty --- Intertemporal Firm Choice and Growth, Investment, or Financing --- Truncated and Censored Models --- Switching Regression Models --- Threshold Regression Models --- Industry Studies: Manufacturing: General --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Investment --- Capital --- Intangible Capital --- Capacity --- Discrete Regression and Qualitative Choice Models --- Discrete Regressors --- Proportions --- Financial Institutions and Services: Government Policy and Regulation --- Manufacturing industries --- Investment & securities --- Macroeconomics --- Econometrics & economic statistics --- Financial services law & regulation --- Manufacturing --- Stocks --- Private investment --- Probit models --- Capital adequacy requirements --- Economic sectors --- Financial institutions --- National accounts --- Econometric analysis --- Financial regulation and supervision --- Saving and investment --- Econometric models --- Asset requirements --- Ghana

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This paper addresses the issue of threshold effects between public debt and economic growth in the Caribbean. The main finding is that there exists a threshold debt to gross domestic product (GDP) ratio of 55–56 percent. Moreover, the debt dynamics begin changing well before this threshold is reached. Specifically, at debt levels lower than 30 percent of GDP, increases in the debt-to-GDP ratio are associated with faster economic growth. However, as debt rises beyond 30 percent, the effects on economic growth diminishes rapidly and at debt levels reaching 55-56 percent of GDP, the growth impacts switch from positive to negative. Thus, beyond this threshold, debt becomes a drag on growth.

Debts, Public --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Caribbean Area --- Economic conditions. --- Econometrics --- Exports and Imports --- Macroeconomics --- Public Finance --- International Lending and Debt Problems --- 'Panel Data Models --- Spatio-temporal Models' --- Truncated and Censored Models --- Switching Regression Models --- Threshold Regression Models --- Debt Management --- Sovereign Debt --- National Government Expenditures and Related Policies: General --- Fiscal Policy --- Public finance & taxation --- International economics --- Econometrics & economic statistics --- External debt --- Threshold analysis --- Expenditure --- Fiscal stance --- Econometric analysis --- Fiscal policy --- Debts, External --- Expenditures, Public --- Jamaica --- Panel Data Models --- Spatio-temporal Models