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Table 5. 
Channel I: Effect of Undervaluation on Expanding the Tradable Sector's Share of Gross Domestic Product Dependent variable: Share of industrial output in GDP
(1)(2)
Share of industrial output in GDPt−1 0.795* 0.795* 
 (76.56) (76.55) 
Underval 0.013* 0.021* 
 (5.79) (3.78) 
Fin devt −0.002*** −0.002*** 
 (−1.77) (−1.92) 
Underval × fin devt  −0.003* 
  (−3.61) 
Dependency ratiot−1 −0.000* −0.000* 
 (−2.92) (−3.11) 
Trade opennesst−1 0.000 0.000 
 (0.27) (0.31) 
Govt. expenditure sharet−1 −0.014*** −0.017** 
 (−1.78) (−2.08) 
Investment sharet−1 0.021** 0.020** 
 (2.53) (2.41) 
Fixed effects   
Economy fixed effect Yes Yes 
Year fixed effect Yes Yes 
Observations 3,338 3,338 
R2 0.681 0.682 
(1)(2)
Share of industrial output in GDPt−1 0.795* 0.795* 
 (76.56) (76.55) 
Underval 0.013* 0.021* 
 (5.79) (3.78) 
Fin devt −0.002*** −0.002*** 
 (−1.77) (−1.92) 
Underval × fin devt  −0.003* 
  (−3.61) 
Dependency ratiot−1 −0.000* −0.000* 
 (−2.92) (−3.11) 
Trade opennesst−1 0.000 0.000 
 (0.27) (0.31) 
Govt. expenditure sharet−1 −0.014*** −0.017** 
 (−1.78) (−2.08) 
Investment sharet−1 0.021** 0.020** 
 (2.53) (2.41) 
Fixed effects   
Economy fixed effect Yes Yes 
Year fixed effect Yes Yes 
Observations 3,338 3,338 
R2 0.681 0.682 

GDP = gross domestic product.

Notes:

1. Observations are annual data for the period 1980–2011.

2. Both undervaluation and private credit/GDP are in logarithmic form.

3. t-statistics in parenthesis.

4. *** = 10% level of statistical significance, ** = 5% level of statistical significance, * = 1% level of statistical significance.

Sources: Authors’ calculations based on World Bank. “World Development Indicators.” http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators; Penn World Tables 8.0. http://www.rug.nl/research/ggdc/data/pwt/

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