MIT Press

Table 6.

Channel II: Effect of Undervaluation on Increasing the Relative Productivity of the Tradable Sector

Relative productivity of tradable to nontradable sector	(1)	(2)
Relative productivity of tradable to	0.792^*	0.791^*
nontradable sector_t−1	(75.45)	(75.41)
Underval	0.081^*	0.159^*
	(6.47)	(5.01)
Fin devt	−0.018^*	−0.020^*
	(−2.69)	(−3.00)
Underval × fin devt		−0.028^*
		(−2.69)
Dependency ratio_t−1	−0.001^***	−0.001^**
	(−1.72)	(−2.08)
Trade openness_t−1	0.005	0.006
	(0.83)	(0.91)
Govt. expenditure share_t−1	−0.089^**	−0.113^*
	(−2.06)	(−2.58)
Investment share_t−1	0.061	0.052
	(1.34)	(1.15)
Fixed effects
Economy fixed effect	Yes	Yes
Year fixed effect	Yes	Yes
Observations	3,317	3,317
R²	0.666	0.667

Relative productivity of tradable to nontradable sector	(1)	(2)
Relative productivity of tradable to	0.792^*	0.791^*
nontradable sector_t−1	(75.45)	(75.41)
Underval	0.081^*	0.159^*
	(6.47)	(5.01)
Fin devt	−0.018^*	−0.020^*
	(−2.69)	(−3.00)
Underval × fin devt		−0.028^*
		(−2.69)
Dependency ratio_t−1	−0.001^***	−0.001^**
	(−1.72)	(−2.08)
Trade openness_t−1	0.005	0.006
	(0.83)	(0.91)
Govt. expenditure share_t−1	−0.089^**	−0.113^*
	(−2.06)	(−2.58)
Investment share_t−1	0.061	0.052
	(1.34)	(1.15)
Fixed effects
Economy fixed effect	Yes	Yes
Year fixed effect	Yes	Yes
Observations	3,317	3,317
R²	0.666	0.667

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 are in parenthesis.

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