Growth and finance

I have been working on economic growth and financial development for several years. All of this work is with my colleagues and friends Scott L. Baier and Robert Tamura.

There are two basic papers outlining our data and the general conclusions from it. The less technical one is “Modern Economic Growth and Recent Stagnation” which was published in the Federal Reserve Bank of Atlanta Economic Review. The more technical one published in Economic Inquiry in January 2006 is “How Important Are Capital and Total Factor Productivity for Economic Growth?”.

Our data on economic growth are available for your use. These data cover much longer time periods than the commonly used Summers and Heston data. The “Data Appendix” describes how the data were collected and organized. The data are available in Excel format, which you should be able to convert into your preferred format. The basic data are available in bdt200402.xls. Data on even decade years (interpolated when necessary) are available in bdtinterp200402.xls. Information about the headings and meanings for the basic data are available in a readme file.

A paper in the Journal of International Money and Finance examines the question “Does Opening A Stock Exchange Increase Economic Growth?” The short answer is “yes” but it takes a long time, on the order of 20 to 40 years. If you don’t have easy access to the JIMF, let me know and I will be glad to send you an Adobe Acrobat pdf copy of the final paper.

Factor Returns, Institutions and Geography: A View from Trade” is a more recent completed paper in this line of research. We break total factor productivity into capital and labor productivity using implications of trade theory for the data. Institutions such as property rights have important effects on an economy’s productivity. We are able to break those productivity effects into capital and labor productivity, thereby looking at whether improved property rights benefit, workers, owners or capital or both. We also break the effect on labor into skilled versus unskilled labor.

The most recently completed paper is “Financial and Real Integration”. In this paper, Scott Baier and I examine the relationship between real integration of returns to labor and capital and financial integration. This paper is published in Money, Deriviative, Innovation and Growth edited by Paolo Savona, pp. 25-53, Florence: Fondazione CESIFIN, 2007.