Nonlinearities and Parameter Instability in the Finance-Growth Nexus

Catherine Prettner

Publication: Working/Discussion PaperWU Working Paper

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Abstract

This paper offers a re-assessment of the finance-growth nexus in a framework that allows to distinguish between short-run versus long-run effects. Our dataset contains information on 45 developed and developing countries over the period 1995-2011. We make use of the integration and cointegration properties of the data, establish a cointegrating relation and derive the long-run elasticities of per capita GDP with respect to employment, the physical capital stock, and financial development. We employ these results to specify an error correction model and assess whether the years of crisis have changed the relationship between finance and growth. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 1 May 2016

Publication series

NameDepartment of Economics Working Paper Series
No.224

WU Working Paper Series

  • Department of Economics Working Paper Series

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