Logo
Munich Personal RePEc Archive

Elusive Relationship between Business-cycle Volatility and Long-run Growth

Mallick, Debdulal (2015): Elusive Relationship between Business-cycle Volatility and Long-run Growth.

[thumbnail of MPRA_paper_64502.pdf]
Preview
PDF
MPRA_paper_64502.pdf

Download (573kB) | Preview

Abstract

This paper revisits the empirical relationship between business-cycle volatility and long-run growth. The key contribution lies in controlling for fluctuations in the trend growth that also accounts for enormous heterogeneity among countries in their long-run growth trajectories; otherwise, the estimating equation would be misspecified. We find that there is no effect of BC volatility on growth once estimation duly accounts for these fluctuations. Otherwise, there would be a significant effect of BC volatility on growth that also varies across time period and country income groups. We instead find a negative effect of persistence in volatility on growth. The results have implications in light of recent global financial crises, and also for cross-country regressions.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.