This paper contributes to the empirical literature on the non-trivial relationship between financial development and economic growth. Based on panel data from 98 developed and developing countries, we show that for smooth economic development, balanced growth of both the industrial and financial...

We study the cross sectional return implications of technology shocks through the channel of capital reallocation. We present a model in which capital reallocation frictions limit the non-innovating firms' ability to redeploy assets when facing technology shocks and forces it to hold...

We analyze recent contributions to growth theory based on the model of expanding variety of Romer [Romer, P. (1990). “Endogenous technological change”. Journal of Political Economy 98, 71–102]. In the first part, we present different versions of the benchmark linear model with imperfect...

Financial institutions affect R&D and growth through their roles as corporate control devices with respect to disciplining managers and selecting projects. For an institution which generates a soft-budget constraints problem, we show how it creates conditions for relatively low economic growth...

This paper provides new evidence on the relationship between innovation, competition and distance to the technology frontier, using enterprise surveys from 40 developing and transition countries. Different from previous empirical studies, the distance to frontier is measured by a firm's...

This paper argues that excessive financial development in combination with high levels of technological innovation or R&D activities may lead to the former being ineffective in generating economic growth. This hypothesis is examined through a dynamic panel analysis using two measures of...

The paper aims to test long-term and short-term causality from four exchange rates, the Korean won/$US, the Korean won/Euro, the Korean won/Japanese yen, and the Korean won/Chinese yuan, to the Korea Composite Stock Price Index in the presence of several macro-economic variables using monthly...