Efficiency, depth and growth: Quantitative implications of finance and growth theory

Alex Trew

    Research output: Contribution to journalArticlepeer-review

    7 Citations (Scopus)

    Abstract

    We develop a parsimonious finance and endogenous growth model with microeconomic frictions in entrepreneurship and a role for credit constraints. We demonstrate that though an efficiency-growth relation will always exist, the efficiency-depth-growth relation may not. This has implications for the connection between the theory and empirics of finance and growth. We go on to ask whether the model can account for some historical trends in growth, financial depth and financial efficiency for the UK over the period 1850-1913. The best model of finance and growth is one that departs from the standard depth-growth link. (C) 2007 Elsevier Inc. All rights reserved.

    Original languageEnglish
    Pages (from-to)1550-1568
    Number of pages19
    JournalJournal of Macroeconomics
    Volume30
    DOIs
    Publication statusPublished - Dec 2008

    Keywords

    • Finance and growth
    • Endogenous growth
    • Economic history
    • INDUSTRIAL-REVOLUTION
    • HISTORICAL EVIDENCE
    • ENDOGENOUS GROWTH
    • ECONOMIC-GROWTH
    • INTERMEDIATION
    • MARKETS
    • MODEL

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