01992cas a2200265 a 4500 AALejournalIMF011377 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463924553 1018-5941 BD-DhAAL BD-DhAAL Shabunina, Anna. The Puzzle of Persistently Negative Interest Rate-Growth Differentials : Financial Repression or Income Catch-Up? / Anna Shabunina, Julio Escolano, Jaejoon Woo. Washington, D.C. : International Monetary Fund, 2011. 1 online resource (29 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The interest rate-growth differential (IRGD) shows a marked correlation with GDP per capita. It has been on average around 1 percentage point for large advanced economies during 1999-2008; but below -7 percentage points among non-advanced economies - exerting a powerful stabilizing influence on government debt ratios. We show that large negative IRGDs are largely due to real interest rates well below market equilibrium - possibly stemming from financial repression and captive and distorted markets, whereas the income catch-up process plays a relatively modest role. We find econometric support for this conjecture. Therefore, the IRGD in non-advanced economies is likely to rise with financial integration and market development, well before their GDP per capita converges to advanced-economy levels. Mode of access: Internet Escolano, Julio. Woo, Jaejoon. IMF Working Papers; Working Paper ; No. 2011/260 Full text available on IMF http://elibrary.imf.org/view/journals/001/2011/260/001.2011.issue-260-en.xml IMF e-Library