DP1160 Demand-Driven Financial Development
|Publication Date:||April 1995|
|Keyword(s):||Crowding-Out, Deficits, Economic Growth, Financial Markets, Privatization, Saving|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=1160|
The historical record suggests that economic development is associated with the rise of the financial sector. This rise is often triggered by exogenous events such as large budget deficits generated by wars or the availability of large investment projects such as railroads. This paper discusses the role played by such demand factors in financial development and how they favour growth.