Climate threshold, financial hoarding and economic growth

Wencong Lu (), Jianfeng Huang and Oliver Musshoff

Applied Economics, 2015, vol. 47, issue 42, 4535-4548

Abstract: We use an iterative finite difference method to establish theoretical models that reflect the relationships among climate threshold, financial hoarding and economic growth. We build a simultaneous equations model to conduct an empirical analysis based on China's statistical data from 1979 to 2012. Our study yields the following results: China's climate threshold has shown a zigzag-shaped rising trend since 1979; the main reasons for the rapid expansion of financial hoarding were high savings rate, savings leakage, higher marginal efficiency of financial hoarding compared to capital efficiency or higher internal creativity of the financial sector; there were positive cumulative effects between financial hoarding and economic growth, which were significantly inhibited by climate threshold; the climate threshold had discrepant influences on different industries. To achieve a balanced economy, more money should be invested in the real sector to appropriately reduce the rate of savings leakage; the financial sector should move from scale expansion to service efficiency improvements to increase its marginal contribution to the economy and to enhance capital efficiency; the real sector should improve technological innovation and speed up the adaptive adjustment in climate-sensitive industries to move from economic growth to advanced development.

Date: 2015
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/00036846.2015.1031873

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