Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1003218 | Research in International Business and Finance | 2009 | 10 Pages |
Abstract
This paper investigates the nature of the links between the development of financial markets and economic performances in five advanced economies. The vector error correction model (VECM) establishes the quantitative importance of long-run relationships among three financial variables and the real output. Granger's causality test then suggests short-run causality between financial markets and the real sector as well as the substitution effect of the individual sectors in the financial market of each country. The results support the supply-leading hypothesis that the development of financial markets spurs growth for all countries except for Canada. The demand-driven hypothesis is confirmed for Canada only in the short run.
Keywords
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Business and International Management
Authors
Sisira R.N. Colombage,