Physics

Granger causality

Error correction model

Macroeconomics

Unit root test

Cointegration

Econometrics

Paleontology

Economics

Unit root

Test (biology)

Quantum mechanics

Panel data

Causality (physics)

Biology

Technological Forecasting and Social Change

This article employs panel unit root and panel cointegration tests to determine the interactions between innovation, financial development, and economic growth in 49 European countries between 1961 and 2014. The results suggest a cointegrating relationship between the three series. A vector error-correction model is estimated, showing that financial development and innovation are both causative factors of economic growth in the long run. Thus, a policy focus on financial development and innovation is appropriate as an approach to boost the economic performance of these countries.

Are innovation and financial development causative factors in economic growth? Evidence from a panel granger causality test