Financial Development and Sectoral Output Growth in 19th Century Germany
AbstractIn this paper we re-evaluate the hypothesis that the development of the financial sector was an essential factor behind economic growth in 19th century Germany. We apply a structural VAR framework to a new annual data set from 1870 to 1912 that was initially recorded by Walther Hoffmann (1965). With respect to the literature, the distinguishing characteristic of our analysis is the focus on different sectors in the economy and the interpretation of the findings in the context of a two-sector growth model. We find that all sectors were affected significantly by shocks from the banking system. Interestingly, this link is the strongest in sectors with small, non-tradable goods producing firms, such as services, transportation and agriculture. In this regard, the growth patterns in 19th century Germany are reminiscent to those in today's emerging markets.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3283.
Date of creation: 2010
Date of revision:
economic growth; financial development; sectoral asymmetries;
Other versions of this item:
- Katharina Diekmann & Frank Westermann, 2010. "Financial Development and Sectoral Output Growth in 19th Century Germany," Working Papers, Institute of Empirical Economic Research 86, Institute of Empirical Economic Research.
- Westermann, Frank & Diekmann, Katharina, 2011. "Financial Development and Sectoral Output: Growth in 19th Century Germany," Proceedings of the German Development Economics Conference, Berlin 2011 81, Verein für Socialpolitik, Research Committee Development Economics.
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
- N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
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