earticle

영어

In this paper, we investigate the dynamic relationships between international financial integration and economic growth by using quarterly data from 1995 to 2015 in Korea. And this study implements a variety of time series data analysis like impulse response function and forecast error variance decomposition based on VAR model besides Granger causality test. At first, the results of Granger causality test shows that international financial integration significantly causes economic growth. But causality between two variables in an opposite direction could not be found. To be more specific, we find that international financial integration has the positive effects on real GDP growth rate in Korea from the results of impulse response function based on VAR model. In addition, comparison results of the explanation power from forecast error variance decomposition show that foreign direct investment has the stronger explanation power than foreign portfolio investment although the extent of the former is smaller than the latter.