Do Technological Development and Financial Development Promote Economic Growth: Fresh Evidence from Romania
Ijaz Ur Rehman,
Muhammad Shahbaz () and
Phouphet Kyophilavong ()
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Ijaz Ur Rehman: University of Malaya, Kuala Lumpur, Malaysia.
International Journal of Economics and Empirical Research (IJEER), 2016, vol. 4, issue 2, 60-76
Purpose: We study the relationship between financial development, technological development and economic growth in Romania. The study covers the time period of 1985-2011 in the case of Romania. We have applied structural break unit root in testing the integrating properties of the variables. Methodology: The cointegration for long run relationship between the variables is investigated by applying the ARDL bounds testing in the presence of structural breaks in the series. We construct aggregate indices of financial development and technological development using principal component analysis. Findings: Our empirical exercise shows the presence of cointegration between financial development, technological development and economic growth in the case of Romania. Financial development and technological development contribute to economic growth. Moreover, financial development leads technological development which Granger causes economic growth.Recommendations: Our empirical evidence suggests that economic growth is driven by financial development via technological development and that, in Romania,a stable financial system and capital market can facilitate technological innovations.
Keywords: : Financial Development; Technological Development; Economic Growth; Romania (search for similar items in EconPapers)
JEL-codes: O31 O33 O47 (search for similar items in EconPapers)
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Working Paper: Do Technological Developments and Financial Development Promote Economic Growth: Fresh Evidence from Romania (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ijr:journl:v:4:y:2016:i:2:p:60-76
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