Finance and Economic Growth in OECD and G20 Countries

Abstract

Organisation de Coopération et de Développement Économiques Organisation for Economic Co-operation and Development 16-Jun-2015 ___________________________________________________________________________________________ _____________ English -Or. English ECONOMICS DEPARTMENT FINANCE AND ECONOMIC GROWTH IN OECD AND G20 COUNTRIES ECONOMICS DEPARTMENT WORKING PAPERS No. 1223 By Boris Cournède and Oliver Denk OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s).

Finance and Inclusive Growth

“…The present text does not present it in detail: Section 2.1 of Cournède and Denk (2015) provides an overview of this literature and Beck (2012) a more extensive survey. The focus here is on summarising important potential transmission channels.…”

“…A set of working papers presents the underlying analysis in detail: Cournède and Denk (2015) investigate how the financial sector influences economic growth; focus on the economic effects of implicit bank debt guarantees; look at aggregate links between finance and income inequality; Denk (2015) analyses European micro-level data to probe the impact of financial sector pay on income inequality; Denk and Cazenave-Lacroutz (2015) document linkages between credit distribution across households and income inequality.…”

“…Appendix 1 to Cournède and Denk (2015) describes the sources of the data used in Sections 2 and 3. Financial sector value added remunerates capital and labour.…”

Structural reforms to boost growth and living standards in Argentina

“…Moreover, the lack of financial instruments implies that that there is little room to smooth consumption and investment, which exacerbates macroeconomic volatility. While some studies have highlighted that there may be too much finance from a certain point of financial development onward (Cournede and Denk, 2015), Argentina is certainly far below that point. Better financial development would boost growth by providing more domestic financing to investment projects and would also strengthen the monetary transmission channel, thus making monetary policy more effective in taming inflation.…”

Policy Challenges for the Next 50 Years

“…However, higher credit-to-GDP ratios may also entail larger financial risks (Sutherland and Hoeller, 2012) and hamper growth, all other things equal (Cournède, B. and O. Denk, 2014). …”