Appendix 6B Description of the Data[242]
A standard specification of the growth regression used in the “too much finance” literature is adopted for chapter 6: The per capita real growth rate is related to the indicator variable such that g = a + lny* + bX - cX2, where g is per capita real growth, lny * is the natural logarithm of initial ppp per capita income, and X is the indicator variable substituted in place of the financial depth indicator.
The same countries[243] and growth indicators used in Cecchetti and Kharroubi (2012) are also used in this chapter. The cross-country growth data thus refer to per capita real growth that is constructed by using the real GDP at constant 2005 national prices (2005 dollars) and population variables available in the Penn World Table version 8.1 hosted on the University of Groningen's website. Similarly, initial ppp per capita income refers to the variable for expenditure-side real GDP at chained PPPs (2005 dollars) in the Penn World Table database.
The three variables that are substituted for a financial depth indicator as the variable of interest in the three separate panel regressions reported in this chapter are physicians (per 1,000 people), researchers in R&D (100s per million people), and fixed telephone subscriptions (per 100 people). Data for these three indicators are from the World Bank's World Development Indicators. As in Cecchetti and Kharroubi (2012), the regression equations for physicians and telephone subscriptions were estimated over six nonoverlapping five-year periods from 1980 to 2009, with g, the five-year average per capita real growth, regressed on the five-year average of the respective indicator variable. For the regression relating per capita real growth to the share of R&D technicians in the population, due to missing data on R&D technicians, the time period examined is 1995-2009 and the dataset comprises 44 countries (data are not available for Bangladesh, Chile, Egypt, Morocco, Nigeria, and Vietnam).