Financing Through Bond Issues and the Nexus with Economic Growth
Europainstitut Working Paper No. 68
52 Pages Posted: 27 Jul 2007
Date Written: September 2005
Abstract
This paper examines for the first time the relationship between the net issue values of aggregate bonds, as well as the different bond sectors separately, and economic growth. The other new feature of this study is the usage of quarterly data. Granger causalities are calculated for time series of 15 European countries, the USA, and Japan in order to test if there is a positive relationship between the development of bond markets and economic growth also for shorter time periods. The significant Granger causalities found show the following tendency: Economic growth is causal for net issue values of government bonds, and net issuance of corporate and financial institutions bonds are causal for economic growth. That finding is important for the future architecture of the financial sector, in particular in emerging markets and the new EU member countries.
Keywords: bond markets, economic growth, Granger causalities
JEL Classification: E44, O16, O40
Suggested Citation: Suggested Citation
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