Zhang, Bo and Zhou, Peng ![]() |
![]() |
PDF
- Accepted Post-Print Version
Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (803kB) |
Abstract
The global financial crisis since 2008 revived the debate on whether or not and to what extent financial development contributes to economic growth. This paper reviews different theoretical schools of thought and empirical findings on this nexus, building on which we aim to develop a unified, microfounded model in a small open economy setting to accommodate various theoretical possibilities and empirical observations. The model is then calibrated to match some well-documented stylized facts. Numerical simulations show that, in the long run, the welfare-maximizing level of financial develop is lower than the growth-maximizing level. In the short run, the price channel (through world interest rate) dominates the quantity-channel (through financial productivity), suggesting a vital role of international cooperation in tackling systemic risk of the global financial system.
Item Type: | Article |
---|---|
Date Type: | Publication |
Status: | Published |
Schools: | Business (Including Economics) |
Publisher: | Elsevier |
ISSN: | 1062-9408 |
Date of First Compliant Deposit: | 1 September 2021 |
Date of Acceptance: | 20 August 2021 |
Last Modified: | 12 Nov 2023 21:01 |
URI: | https://orca.cardiff.ac.uk/id/eprint/143792 |
Citation Data
Cited 4 times in Scopus. View in Scopus. Powered By Scopus® Data
Actions (repository staff only)
![]() |
Edit Item |