Mapping the Elasticity of Economic Growth to Financial Development: A 1980 ? 2012 empirical analysis for 100 countries

Viena

Workshop; XV Arnoldshain Seminar ?The EU and Latin America Facing Globalization?; 2017

Universidad de Viena

This research analyzes the impact of financial development on economic growth for a set of 100 countries. It applies cointegration methods taking into account country-heterogeneities, which have not been studied up to now at a detailed level.Financial development is measured by a broad index or one of its three dimensions (deepness, accessibility and efficiency). Mapping the estimated elasticities of economic growth to financial development shows, graphically, a bell-shaped quadratic form. The elasticity of economic growth with respect to financial deepness or accessibility exhibits a similar shape. The evidence of strong country-heterogeneity suggests that policy prescriptions should take into account the idiosyncratic factors of each country.