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A Pedagogical Tool For Illustrating The Real Impact Of The Financial Sector

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  • Yuan K. Chou

Abstract

We devise a simple way of incorporating the financial sector into a growth model that is useful pedagogically. Financial innovation raises the efficiency of financial intermediation, which facilitates capital accumulation. The model may be extended to include real R&D as a symbiotic source of endogenous growth.

Suggested Citation

  • Yuan K. Chou, 2003. "A Pedagogical Tool For Illustrating The Real Impact Of The Financial Sector," Department of Economics - Working Papers Series 888, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:888
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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-03/888.pdf
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    References listed on IDEAS

    as
    1. Tufano, Peter, 1989. "Financial innovation and first-mover advantages," Journal of Financial Economics, Elsevier, vol. 25(2), pages 213-240, December.
    2. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
    5. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    6. Helios HERRERA & Enrique SCHROTH, 2001. "The Welfare Implications of Non-Patentable Financial Innovations," FAME Research Paper Series rp82, International Center for Financial Asset Management and Engineering.
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    Cited by:

    1. Yuan K. Chou & Martin S. Chin, 2004. "Opening The Financial Sector To Foreign Competition: Assessing The Dynamic Macroeconomic Consequences Using A Two-Sector Growth Model," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 49(02), pages 195-224.

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    More about this item

    Keywords

    Financial innovations; economic growth;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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