The econometrics of finance and growth

T.H.L. Beck

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

This chapter reviews different econometric methodologies to assess the relationship between financial development and growth. It illustrates the identification problem, which is at the center of the finance and growth literature, using the example of a simple ordinary least squares estimation. It discusses cross-sectional and panel instrumental variable approaches to overcome the identification problem. It presents the time series approach, which focuses on the forecast capacity of financial development for future growth rates, and differences-in-differences techniques that try to overcome the identification problem by assessing the differential effect of financial sector development across states with different policies or across industries with different needs for external finance. Finally, it discusses firm- and household-level approaches that allow analysts to dig deeper into the channels and mechanisms through which financial development enhances growth and welfare, but pose their own methodological challenges.
Original languageEnglish
Title of host publicationThe Palgrave Handbook of Econometrics, Vol. 2
EditorsK. Patterson, T.C. Mills
Place of PublicationBasingstoke
PublisherPalgrave Macmillan
Pages1180-1212
Number of pages1348
ISBN (Print)9781403917997
Publication statusPublished - 2009

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Finance and growth
Identification problem
Econometrics
Financial development
Industry
Analysts
Difference-in-differences
Household
Financial sector development
Econometric methodology
External finance
Ordinary least squares
Instrumental variables

Cite this

Beck, T. H. L. (2009). The econometrics of finance and growth. In K. Patterson, & T. C. Mills (Eds.), The Palgrave Handbook of Econometrics, Vol. 2 (pp. 1180-1212). Basingstoke: Palgrave Macmillan.
Beck, T.H.L. / The econometrics of finance and growth. The Palgrave Handbook of Econometrics, Vol. 2. editor / K. Patterson ; T.C. Mills. Basingstoke : Palgrave Macmillan, 2009. pp. 1180-1212
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Beck, THL 2009, The econometrics of finance and growth. in K Patterson & TC Mills (eds), The Palgrave Handbook of Econometrics, Vol. 2. Palgrave Macmillan, Basingstoke, pp. 1180-1212.

The econometrics of finance and growth. / Beck, T.H.L.

The Palgrave Handbook of Econometrics, Vol. 2. ed. / K. Patterson; T.C. Mills. Basingstoke : Palgrave Macmillan, 2009. p. 1180-1212.

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

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Beck THL. The econometrics of finance and growth. In Patterson K, Mills TC, editors, The Palgrave Handbook of Econometrics, Vol. 2. Basingstoke: Palgrave Macmillan. 2009. p. 1180-1212