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on Financial Development and Growth |
| By: | Jakob B. Madsen |
| Abstract: | This paper examines the effect of international patent stock on total factor productivity for 16 OECD countries over the past 120 years. The results show that the international patent stock is highly influential for economic growth and, together with knowledge spillovers through the channel of imports, has contributed significantly to TFP growth and σ-convergence among the OECD countries over the past 120 years. |
| Keywords: | TFP growth, international diffusion of ideas, international patents, convergence. |
| JEL: | E13 E22 E23 O11 O3 O47 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2007-01&r=fdg |
| By: | James B. Ang |
| Abstract: | This paper provides a survey of the recent progress in the literature of financial development and economic growth. The survey highlights that most empirical studies focus on either testing the role of financial development in stimulating economic growth or examining the direction of causality between these two variables. Although the positive role of finance on growth has become a stylized fact, there are some methodological reservations about the results from these empirical studies. Several key issues unresolved in the literature are highlighted. The paper also points to several directions for future research. |
| Keywords: | Financial development; financial liberalization; economic growth. |
| JEL: | E44 O11 O16 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2007-03&r=fdg |
| By: | Wenli Cheng |
| Abstract: | This paper presents a simple general equilibrium model of financial intermediation, entrepreneurship and economic growth. In this model, the role of financial intermediation is to pool savings and to lend the pooled funds to an entrepreneur, who in turn invests the funds in a new production technology. The adoption of the new production technology improves individual real income. Thus financial intermediation promotes economic growth through affecting individuals’ saving behaviour and enabling the adoption of a new production technology. |
| Keywords: | financial intermediation, entrepreneurship, economic growth |
| JEL: | G21 D90 O40 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2007-18&r=fdg |
| By: | Paresh Narayan; Seema Narayan; Russell Smyth |
| Abstract: | This paper examines the relationship between democracy and economic growth in 30 Sub-Saharan African countries. As our proxy for democracy we first use the democracy index constructed by Freedom House and then check the sensitivity of our findings using, as an alternative proxy for democracy, the Legislative Index of Electoral Competitiveness (LIEC). We find support for the Lipset hypothesis - in the long run, real GDP Granger causes democracy and an increase in GDP results in an improvement in democracy – in Botswana and Niger with both datasets, for Chad with the Freedom House data only and for Cote d’Ivoire and Gabon with the LIEC data only. Support for the compatibility hypothesis - in the long run democracy Granger causes real income and an increase in democracy has a positive effect on real income - is found for Botswana with the Freedom House data and for Madagascar, Rwanda, South Africa and Swaziland with the LIEC data. Support for the conflict hypothesis - in the long run democracy Granger causes real income and an increase in democracy has a negative effect on real income - is found for Gabon with the Freedom House data and Sierra Leone with the LIEC data. |
| Keywords: | Causality, Democracy, Economic Growth, Sub-Saharan Africa. |
| JEL: | O1 O4 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2007-10&r=fdg |
| By: | Jakob B. Madsen; EPRU; FRU |
| Abstract: | Using various indicators of innovative activity and product variety in the OECD countries over the past century, this paper tests whether first- and second-generation models of economic growth are consistent with the data over time and across countries. The estimation results give evidence in favour of Schumpeterian models while the semi-endogenous growth theories are not consistent with the data. |
| Keywords: | Schumpeterian growth theory, semi-endogenous growth theory |
| JEL: | O3 O4 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2007-26&r=fdg |
| By: | Jakob B. Madsen |
| Abstract: | Based on an asset pricing model this paper shows that traditional growth accounting exercises attribute too much weight to capital deepening and suggests a method to filter out TFP-induced capital-deepening from the estimates. Using data for 16 industrialised countries, it is shown that labour productivity and capital deepening have been driven by total factor productivity and reductions in the required stock returns over the past 137 years. Furthermore, it is shown that TFP precedes the K-L ratio and not the other way around. |
| Keywords: | Growth accounting, TFP growth, required stock returns, endogeneity |
| JEL: | E0 E2 O47 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2009-10&r=fdg |