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Are innovation and financial development causative factors in economic growth? Evidence from a panel granger causality test

Rudra P. Pradhan, Mak Arvin () and Sahar Bahmani

Technological Forecasting and Social Change, 2018, vol. 132, issue C, 130-142

Abstract: This article employs panel unit root and panel cointegration tests to determine the interactions between innovation, financial development, and economic growth in 49 European countries between 1961 and 2014. The results suggest a cointegrating relationship between the three series. A vector error-correction model is estimated, showing that financial development and innovation are both causative factors of economic growth in the long run. Thus, a policy focus on financial development and innovation is appropriate as an approach to boost the economic performance of these countries.

Keywords: Innovation; Financial development; Economic growth; Granger causality; European countries (search for similar items in EconPapers)
JEL-codes: O43 O16 E44 E31 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:tefoso:v:132:y:2018:i:c:p:130-142