Article ID Journal Published Year Pages File Type
5083061 International Review of Economics & Finance 2017 26 Pages PDF
Abstract
The literature has established that financial institutions and financial markets have a significant impact on economic growth. The present paper seeks to determine whether they increase the speed of convergence towards the steady-state income. If so, then financial development is a convergence factor in addition to being a growth factor. To carry out our study, we employ the growth model of Ramsey-Cass-Koopman as well as that of Diamond. The RCK model predicts financial development positively affects the speed of convergence while the Diamond model predicts only a level effect. Our empirical analysis supports the prediction of the RCK model.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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