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Submitted by Asli on
David, I was referring not only to growth regressions which do suffer from serious identifications problems as we all know. But there is quite a bit of other evidence that suggest finance matters for growth and that reverse causality alone is not driving this relationship. The literature addresses the identification problem better by using industry and firm level data, and in-depth analysis of individual country cases and the impact of specific financial sector reforms, which all tell a remarkably consistent story. Individual papers are cited and discussed in the background paper for the Growth Commission. Please have a look for a detailed literature review.