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An International Look at the Growth of Modern Finance
| Venue: | Journal of Economics Perspectives |
| Citations: | 7 - 0 self |
BibTeX
@ARTICLE{Reshef_aninternational,
author = {Ariell Reshef},
title = {An International Look at the Growth of Modern Finance},
journal = {Journal of Economics Perspectives},
year = {},
pages = {73--96}
}
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Abstract
We study the rise of finance across a set of now-industrial economies. The long run pattern of the growth of the income share of finance from the 19 th century to current times in the United States is similar to some economies, but not all economies reach the same size and instead reach a plateau. The relationship between financial output and income is non-homothetic and changes three times in this sample. Most of the increase in real GDP per capita from 1870 occurred while financial output and the income share of finance were smaller than their size in 1980. After 1980 the elasticity of income with respect to financial output falls significantly. We find considerable heterogeneity in the size of finance in recent times. There is no evidence for an increase in the unit cost of financial intermediation. We find that information technology and financial deregulation can help explain the increase in relative skill intensity and in relative wages in finance, while common trends, which may be related to financial globalization, also play a role. JEL classifications:
Keyphrases
modern finance international look financial output income share relative wage recent time financial globalization current time jel classification common trend financial intermediation united state th century long run pattern unit cost considerable heterogeneity now-industrial economy financial deregulation relative skill intensity information technology real gdp
