Revisiting the nexus of the financial development and economic development: new international evidence using a wavelet approach

Hyunjoo Kim Karlsson, Kristofer Månsson () and Scott Hacker ()
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Kristofer Månsson: Jönköping International Business School, JIBS
Scott Hacker: Jönköping International Business School, JIBS

Empirical Economics, 2021, vol. 60, issue 5, No 7, 2323-2350

Abstract: Abstract This study investigates Granger causality and instantaneous causality between financial development and economic development for 76 economies of four different income levels. The main novelty of the study is that it fills a gap in existing studies on the relationship between financial development and economic development by employing wavelet analysis, which enables us to study the varying timescale relationships of the variables. Among the findings is that at the scale of 4–8 years, it is more common for financial development and economic development to support each other once a country achieves at least lower-middle-income status.

Keywords: Financial development; Economic development; Economic growth; Causality; Timescales; Wavelet decomposition; G20; C32; O40 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s00181-020-01885-5

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