Does Opening a Stock Exchange Increase Economic Growth?

FRB of Atlanta Working Paper No. 2003-36

35 Pages Posted: 19 Jan 2004

See all articles by Scott L. Baier

Scott L. Baier

Clemson University - John E. Walker Department of Economics

Gerald P. Dwyer

Clemson University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Robert Tamura

Clemson University - John E. Walker Department of Economics; Federal Reserve Bank of Atlanta

Date Written: December 2003

Abstract

We examine the connection between the creation of stock exchanges and economic growth with a new set of data on economic growth that spans a longer time period than generally available. We find that economic growth increases relative to the rest of the world after a stock exchange opens. Our evidence indicates that increased growth of productivity is the primary way that a stock exchange increases the growth rate of output, rather than an increase in the growth rate of physical capital. We also find that financial deepening is rapid before the creation of a stock exchange and slower subsequently.

Keywords: Economic growth, stock exchange, efficiency, productivity, financial deepening

JEL Classification: G15, G10, G15, D90, O16

Suggested Citation

Baier, Scott Leonard and Dwyer, Gerald P. and Tamura, Robert, Does Opening a Stock Exchange Increase Economic Growth? (December 2003). FRB of Atlanta Working Paper No. 2003-36, Available at SSRN: https://ssrn.com/abstract=487604 or http://dx.doi.org/10.2139/ssrn.487604

Scott Leonard Baier

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States
864-656-4534 (Phone)

Gerald P. Dwyer (Contact Author)

Clemson University ( email )

Department of Economics
Clemson University
Clemson, SC 29634
United States

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

Robert Tamura

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States
864-656-1242 (Phone)
864-656-4192 (Fax)

Federal Reserve Bank of Atlanta

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

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