Does Insurance Matter for Growth: Empirical Evidence from OECD Countries

Chien-Chiang Lee ()

The B.E. Journal of Macroeconomics, 2011, vol. 11, issue 1, 28

Abstract: This paper uses disaggregated data on real insurance premiums, including life and non-life insurance premiums, to examine the interrelationship between insurance markets’ activities and economic growth for 10 selected OECD countries during the up-to-date 1979-2006 period. We take recently developed panel unit-root tests, heterogeneous panel cointegration tests, and panel causality techniques and conclude that there is fairly strong evidence favoring the hypothesis of a long-run equilibrium relationship between real GDP and insurance markets’ activities after allowing for the heterogeneous country effect. The results of the long-run panel regression parameter indicate a significantly positive relationship between real GDP and the activities within the insurance market, while a development from the non-life insurance market has a greater impact on real GDP than the activities in the life insurance market do. By implementing the dynamic panel-based error correction model, we determine that insurance markets’ development and economic growth present both the long-run and short-run bidirectional causalities.

Keywords: insurance premium; real GDP; panel cointegration; panel causality; OECD countries (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (28)

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DOI: 10.2202/1935-1690.2080

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