Disaggregated Credit Flows and Growth in Central Europe

Dirk J Bezemer and RA Werner

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to explore the link between credit and output in the context of a developed transition economy. Salient credit market features of these economies are (i) credit market imperfections leading to constraints on growth and (ii) the rapidly growing importance during transition of their financial sectors (the insurance, pension funds and real estate sectors). We develop a framework of credit and output including separate measures for credit to the real sector and financial sectors and for credit constraints, taking account of the role of trade credit. In our empirical work we focus on the Czech Republic because of the level of its financial development and data quality. In VAR and ARIMA analyses we find that our disaggregated measures for credit flows are better predictors of nominal growth than traditional, aggregate measures.

Keywords: Credit; growth; transition; central Europe; Czech Republic (search for similar items in EconPapers)
JEL-codes: E44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-tra
Date: 2009-05

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http://mpra.ub.uni-muenchen.de/15896/ orginal version
http://mpra.ub.uni-muenchen.de/17691/ revised version

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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:15896

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