Financial development and macroeconomic performance: a cointegration approach

Candida Ferreira

No 2020/0155, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: The paper tests the existence of long-term relations, measured through cointegration,between all the IMF financial development indices and some macroeconomic performance indicators applying panel cointegration tests in a panel with 46 countries, and in a panel including only the sub-sample of the 28 EU countriesover the interval 1990-2017. Overall, there are no significant differences between the results obtained for whole sample and the panel including only the EU countries. The results obtained clearly point to the existence of cointegration between the financial development indices and the real GrossDomestic Product, aswell aswith the inflation, the unemployment rate, and very particularly, with the current account, and with the net international investment position. The results also show there are no significant differences between the results obtained for the financial institutions and for the financial markets. Moreover, the results related to the specific aspects addressed by the IMF indices very well demonstrate that much ore mportant han he imple access to or the depth of the financial institutions nd markets is the efficiency of these institutions and markets.

Keywords: Financial development; IMF Financial development indices; macroeconomic performance; cointegration; panel cointegration tests. (search for similar items in EconPapers)
JEL-codes: C13 E02 E44 F36 O43 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-cwa, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Financial Development and Macroeconomic Performance: A Cointegration Approach (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp01552020

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