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Is Solow’s Paradox Absent in World Leading Capital Markets? Econometric Evidence

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  • Bilal Mehmood
  • Anam Shafique
  • Rabia Rafaqat

Abstract

Information technology has transformed the traditional economy into digital economy during this century. Yet there has been debate of Solow’s Paradox in theoretical and empirical literature. Considering its importance, this research examines its impact on Capital Market Activity by using 47 countries of world’s leading capital markets. Market capitalization of listed companies (% of GDP) and Stock traded turnover ratio (%) have been considered as proxies for capital market activity while Information and Communication Technology expenditure is used as development indicators for ICT. Recently development Pooled Mean Group (PMG) approach to cointegration is employed on data of 47 countries capital markets for time span 1990-2012. PMG being a heterogeneous panel estimation technique allows the slope and short run parameters to vary across the countries. Results show the presence of long run relationship between ICT development and capital market activity. Recommendations are made on the basis of empirical findings.

Suggested Citation

  • Bilal Mehmood & Anam Shafique & Rabia Rafaqat, 2014. "Is Solow’s Paradox Absent in World Leading Capital Markets? Econometric Evidence," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(52), pages 45-62, June.
    • Handle: RePEc:rej:journl:v:17:y:2014:i:52:p:45-62
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    Cited by:

    1. Bilal Mehmood & Syed Hassan Raza & Rizwan Baqar, 2015. "Defence, Debt and Democracy: The 3D in South Asia," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(7), pages 312-319, July.
    2. Farwa Amjad & Bilal Mehmood, 2016. "Dynamics of FDI, Technological Transformation and Environmental Degradation in Developing Countries: A Panel Analysis," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 18(59), pages 3-24, March.

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    More about this item

    Keywords

    Solow’s Paradox; ICT expenditure; Market capitalization of listed companies; Stock traded turnover ratio; Mean Group;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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