Using a panel vector auto-regressive model, we study interactions between innovation,
financial development and economic growth in 18 Eurozone countries between 1961
and 2013. We focus on whether causality runs between these variables both ways, one
way, the other way or not at all. Our empirical results show that development of the
financial sector and enhanced innovative capacity in the Eurozone contribute to longterm
economic growth in the countries in the region.