We use the Toda & Yamamoto (1995) causality testing procedure to investigate the relationship, if any, between financial development and economic growth.We use quarterly data from 19 OECD countries and China, and use total credit and interest spread as indicators of financial development. We also consider the impact of financial development on investment and productivity. We find meagre evidence that financial development 'leads' economic growth, either directly or indirectly. This casts further doubt on claims that financial development is a necessary and perhaps sufficient precursor to economic growth.
This paper offers a framework for analyzing sector-specific policy shocks when the sectoral capital stock dynamics are unknown. While the framework outlined here is generally disaggregated according to sector, capital itself is treated as a capital value aggregate. Consequently, no information on investment demand by sector of destination is required. Fixed shares representing ratios between investment and aggregate savings determine investment demand by sector of origin. As the determination of investment expenditures does not occur within an optimization calculus, closure of the model is no longer guaranteed. Therefore, a macro closure rule is derived. This requires that the sum of capital rentals be equal to interest plus depreciation on aggregate capital. The impact of a sector-specific policy shock in a numerically specified, two-sector computable general equilibrium version is compared with the effects of the same policy shock in an equivalent model, except for the fact that in the latter, the sectoral capital stock dynamics are completely unknown. A comparison of the respective intertemporal equilibrium effects shows that the sectoral impact is similar in both frameworks, thus justifying the use of a model with fixed investment shares for policy analysis when data on sectoral capital stocks are unavailable.
This study uses a new Granger causality testing procedure developed by Toda and Yamamoto[Journal of Econometrics, 1995, pp. 225-50] to contribute to the debate on causality between financial development and economic growth. It uses a seven-variable vector autoregressive (VAR) model based upon recent time series data from nine countries of the Organization for Economic Cooperation and Development and China. It is argued that time series models provide better information than more traditional cross-sectional models, and the VAR modeling framework here avoids certain technical problems found in other time series approaches. The study finds evidence of bidirectional causality between financial development and economic growth in addition to some instances of reverse causality. Therefore, it provides little support to the view that finance is a leading sector in the process of economic development. This research also indicates that causality patterns vary between different countries, hence, caution must be taken in generalizing about the relationship between financial development and economic growth.
Followership has been an understudied topic in the academic literature and an underappreciated topic among practitioners. Although it has always been important, the study of followership has become even more crucial with the advent of the information age and dramatic changes in the workplace. This paper provides a fresh look at followership by providing a synthesis of the literature and presents a new model for matching followership styles to leadership styles. The model's practical value lies in its usefulness for describing how leaders can best work with followers, and how followers can best work with leaders.
This study uses a Granger causality procedure to investigate the relationship between financial development and economic growth. The authors estimate a vector autoregression (VAR) model for nine OECD countries and China. They argue that a time-series approach is superior to a cross-sectional one and that the VAR framework avoids technical problems common in other time-series models. Evidence is presented of bidirectional causality between financial development and growth in half of the countries and reverse causality in three others. There is little support for the hypothesis that finance "leads" growth, and caution must be exercised in making general conclusions about this relationship. . We are indebted to two anonymous referees for their helpful comments and suggestions.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.