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The Growth-Finance Nexus and European Integration: A Macroeconomic Perspective

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Author Info

  • Mariani, Fabio

    (University of Rome "La Sapienza")

  • Padoan, Pierre Carlo

    ()
    (University of Rome "La Sapienza")

Abstract

In this paper we have looked at two issues. We have reconsidered some of the evidence on the growth-finance nexus, taking into account both different sources of growth and different national characteristics. Secondly, we have considered the implications of different growth-finance models in for the process of EU integration, as defined with respect to the targets set at the Lisbon summit, in March 2000. Our estimation results show that: a) finance affects growth though different channels (GDP, investment, productivity, technology) all of which are relevant in EU integration; b) EU membership has played a role in boosting growth through productivity enhancement; c) Both banks and markets have an impact on growth; d) The rise of an innovation related bubble at the end of the 80's has increased the importance of market based finance in boosting technology driven growth, but credit finance has maintained a significant role in supporting investment driven growth (which may be associated in part with enhanced process innovation, itself related to IT); e) While there is evidence of similar growth finance relations across countries the growth-finance nexus is far from homogeneous. National specificities matter both because growth is driven by different factors with different intensity in different countries and because the relative weight of credit and market finance varies across countries. f) In general market finance is more relevant in countries where technology driven growth is more important

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Bibliographic Info

Paper provided by United Nations University, Institute for New Technologies in its series EIFC - Technology and Finance Working Papers with number 23.

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Date of creation: 2003
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Handle: RePEc:dgr:unutaf:eifc03-23

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Web page: http://www.intech.unu.edu

Related research

Keywords: finance; economic growth; European integration; macroeconomics;

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References

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  1. Greenwood, J. & Jovanovic, B., 1990. "Financial Development, Growth, And The Distribution Of Income," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers, University of Western Ontario, The Centre for the Study of International Economic Relations 9002, University of Western Ontario, The Centre for the Study of International Economic Relations.
  2. Jappelli, Tullio & Pagano, Marco, 2008. "Financial Market Integration Under EMU," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7091, C.E.P.R. Discussion Papers.
  3. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
  4. Levine, Ross & Zervos, Sara, 1996. "Stock markets, banks, and economic growth," Policy Research Working Paper Series 1690, The World Bank.
  5. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
  6. Arestis, Philip & Demetriades, Panicos O & Luintel, Kul B, 2001. "Financial Development and Economic Growth: The Role of Stock Markets," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 33(1), pages 16-41, February.
  7. Bart Hobijn & Boyan Jovanovic, 2001. "The Information-Technology Revolution and the Stock Market: Evidence," American Economic Review, American Economic Association, American Economic Association, vol. 91(5), pages 1203-1220, December.
  8. Mohsin S. Khan & A. Senhadji Semlali, 2000. "Financial Development and Economic Growth," IMF Working Papers 00/209, International Monetary Fund.
  9. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
  10. Beck, T.H.L. & Levine, R. & Loayza, N., 2000. "Financial intermediation and growth: Causality and causes," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125519, Tilburg University.
  11. Beck, Thorsten & Levine, Ross, 2001. "Stock markets, banks, and growth : correlation or causality?," Policy Research Working Paper Series 2670, The World Bank.
  12. Carettoni, A & Manzocchi, S & Padoan, P.C., 2001. "The Growth-Finance Nexus and European Integration. A Review of the Literature," EIFC - Technology and Finance Working Papers, United Nations University, Institute for New Technologies 5, United Nations University, Institute for New Technologies.
  13. Beck, Thorsten & Levine, Ross, 2000. "New firm formation and industry growth - does having a market- or bank-based system matter?," Policy Research Working Paper Series 2383, The World Bank.
  14. Michael Leahy & Sebastian Schich & Gert Wehinger & Florian Pelgrin & Thorsteinn Thorgeirsson, 2001. "Contributions of Financial Systems to Growth in OECD Countries," OECD Economics Department Working Papers 280, OECD Publishing.
  15. Mariassunta Giannetti & Luigi Guiso & Tullio Jappelli & Mario Padula & Marco Pagano, 2002. "Financial Market Integration, Corporate Financing and Economic Growth," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 179, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  16. Boyan Jovanovic & Jeremy Greenwood, 1999. "The Information-Technology Revolution and the Stock Market," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 116-122, May.
  17. Michael Thiel, 2001. "Finance and economic growth - a review of theory and the available evidence," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 158, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  18. Shan, Jordan Z & Morris, Alan G & Sun, Fiona, 2001. "Financial Development and Economic Growth: An Egg-and-Chicken Problem?," Review of International Economics, Wiley Blackwell, vol. 9(3), pages 443-54, August.
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Cited by:
  1. Giorgio Calcagnini & Enrico Saltari, 2002. "Labour and financial market determinants of investiment decisions in Europe," Working Papers, University of Rome La Sapienza, Department of Public Economics 56, University of Rome La Sapienza, Department of Public Economics.
  2. Paolo Guerrieri & Bernardo Maggi & Valentina Meliciani & Pier Carlo Padoan, 2005. "Technology Diffusion, Services, and Endogenous Growth in Europe. Is the Lisbon Strategy Still Alive?," Bruges European Economic Research Papers, European Economic Studies Department, College of Europe 2, European Economic Studies Department, College of Europe.

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