Financial Development and Sectoral Output: Growth in 19th Century Germany

Frank Westermann and Katharina Diekmann

No 81, Proceedings of the German Development Economics Conference, Berlin 2011 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: In this paper we re-evaluate the hypothesis that the development of the financial sector was an essential factor behind economic growth in 19th century Germany. We apply a structural VAR framework to a new annual data set from 1870 to 1912 that was initially recorded by Walther Hoffmann (1965). With respect to the literature, the distinguishing characteristic of our analysis is the focus on different sectors in the economy and the interpretation of the findings in the context of a two-sector growth model. We find that all sectors were affected significantly by shocks from the banking system. Interestingly, this link is the strongest in sectors with small, non-tradable goods producing firms, such as services, transportation and agriculture. In this regard, the growth patterns in 19th century Germany are reminiscent to those in today's emerging markets.

Keywords: Economic Growth; Financial Development; Sectoral asymmetries (search for similar items in EconPapers)
JEL-codes: C22 N13 N23 O11 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-fdg and nep-his
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/48284/1/81_westermann.pdf (application/pdf)

Related works:
Working Paper: Financial Development and Sectoral Output Growth in 19th Century Germany (2010)
Working Paper: Financial Development and Sectoral Output Growth in 19th Century Germany (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:gdec11:81

Access Statistics for this paper

More papers in Proceedings of the German Development Economics Conference, Berlin 2011 from Verein für Socialpolitik, Research Committee Development Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics (econstor@zbw-workspace.eu).