Bond market development and economic growth: The G-20 experience

The paper examines the long-run relationship between bond market development and economic growth in G-20 countries for the period 1990-2011. We use four sets of bond market indicators for studying this relationship. Using vector autoregressive (VAR) model for testing the Granger causalities, the study finds the presence of both unidirectional and bidirectional causality between bond market development and economic growth. The policy implication of this study is that the economic policies should recognize the differences in the development of bond market and economic growth in order to maintain sustainable development in the G-20 countries.