Bond Markets and Economic Growth

Europainstitut Working Paper No. 49

35 Pages Posted: 31 Jul 2007

See all articles by Gerhard Fink

Gerhard Fink

Dept of International Business and Trade

Peter R. Haiss

WU Vienna University of Economics and Business; UniCredit Bank Austria; IES Vienna - Institute for the International Education of Students

Sirma Hristoforova

affiliation not provided to SSRN

Date Written: April 2003

Abstract

This paper examines the relationship between the development of the aggregate bond markets and real GDP in 13 highly developed economies. The recent interest in the ties between the real and the financial sector has usually been on the banking sector and the stock markets, rather ignoring the bond markets as a third essential source of external finance. We fill this gap by providing empirical evidence for causality patterns supporting the supply-leading approach in the USA, UK, Switzerland, Germany, Austria, the Netherlands and Spain over the 1950 to 2000 period. In the cases of Japan, Finland and Italy we find evidence of interdependence between bond market capitalization growth and real output growth. Granger causality test and co-integration approach are employed to support this conjecture.

Keywords: bond markets, financial markets, economic development, Granger causality

JEL Classification: E44, O16, O40

Suggested Citation

Fink, Gerhard and Haiss, Peter R. and Hristoforova, Sirma, Bond Markets and Economic Growth (April 2003). Europainstitut Working Paper No. 49, Available at SSRN: https://ssrn.com/abstract=1003763 or http://dx.doi.org/10.2139/ssrn.1003763

Gerhard Fink (Contact Author)

Dept of International Business and Trade ( email )

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Peter R. Haiss

WU Vienna University of Economics and Business ( email )

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Sirma Hristoforova

affiliation not provided to SSRN ( email )

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