Financial Development and Sectoral Output Growth in 19th Century Germany



Reaction of M

Reaction of IN

Reaction of A

Reaction of T

Reaction of TR

Reaction of S

to a shock in EC

to a shock in EC

to a shock in EC

to a shock in EC

to a shock in EC

to a shock in EC

Figure 6: Impulse Responses for Sectoral Output and Equity Capital with Cholesky Decomposition


Note: The solid lines trace the impulse responses of the sectoral output of mining (M), industry (IN), agriculture (A), trade (T), trans-
portation (TR) and services (S) to a shock in equity capital (EC) for the years 1870 to 1912.

4 A sectoral analysis


Table I: Variance Decomposition for Sectoral Output and Equity Capital

Period

M due to EC

IN due to EC

A due to EC

T due to EC

TR due to EC

S due to EC

^^5

0.670

20.532

16.207

23.426

3.594

5.202

[3.026]

[13.086]

[9.637]

[15.464]

[5.668]

[7.061]

10

0.852

24.775

26.664

20.462

2.272

11.091

[6.767]

[20.563]

[13.019]

[17.772]

[5.561]

[10.762]

Note: The variance decomposition (in percent) is shown for the sectoral output of mining (M), industry
(IN), agriculture (A), trade (T), transportation (TR) and services (S). The figures show the share of the
forecast error variance that is due to a shock in equity capital.



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