The link between economic growth and growth volatility

Shu Chin Lin; Dong Hyeon Kim

doi:10.1007/s00181-013-0680-y

The link between economic growth and growth volatility

Shu Chin Lin, Dong Hyeon Kim

Department of Food and Resource Economics

Research output: Contribution to journal › Article › peer-review

15 Citations (Scopus)

Abstract

This paper investigates the relationship between economic growth and growth volatility through simultaneous equations system. By employing the identification through heteroskedasticity method of Rigobon (Rev Econ Stat 85:777–792, 2003) and using a panel of 158 countries over the period 1960–2010, we find that output volatility is detrimental to economic growth, suggesting that stabilization policies to mitigate short-run economic fluctuations contribute to long-run economic growth. And economic growth accelerates output variability, supporting the feedback effects from growth to the volatility. The evidence is robust to a number of sensitivity tests.

Original language	English
Pages (from-to)	43-63
Number of pages	21
Journal	Empirical Economics
Volume	46
Issue number	1
DOIs	https://doi.org/10.1007/s00181-013-0680-y
Publication status	Published - 2013 Mar 2

Keywords

Economic growth
Growth volatility
Identification through heteroskedasticity
Simultaneous equations models

ASJC Scopus subject areas

Statistics and Probability
Mathematics (miscellaneous)
Social Sciences (miscellaneous)
Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1007/s00181-013-0680-y

Cite this

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keywords = "Economic growth, Growth volatility, Identification through heteroskedasticity, Simultaneous equations models",

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N1 - Funding Information: The authors are grateful to R. Rigobon for kindly making available computer code. Financial support (NSC 97-2410-H-032-003) from the National Science Council of Taiwan is herewith gratefully acknowledged. The usual disclaimer applies. Publisher Copyright: © Springer-Verlag Berlin Heidelberg 2013.

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N2 - This paper investigates the relationship between economic growth and growth volatility through simultaneous equations system. By employing the identification through heteroskedasticity method of Rigobon (Rev Econ Stat 85:777–792, 2003) and using a panel of 158 countries over the period 1960–2010, we find that output volatility is detrimental to economic growth, suggesting that stabilization policies to mitigate short-run economic fluctuations contribute to long-run economic growth. And economic growth accelerates output variability, supporting the feedback effects from growth to the volatility. The evidence is robust to a number of sensitivity tests.

AB - This paper investigates the relationship between economic growth and growth volatility through simultaneous equations system. By employing the identification through heteroskedasticity method of Rigobon (Rev Econ Stat 85:777–792, 2003) and using a panel of 158 countries over the period 1960–2010, we find that output volatility is detrimental to economic growth, suggesting that stabilization policies to mitigate short-run economic fluctuations contribute to long-run economic growth. And economic growth accelerates output variability, supporting the feedback effects from growth to the volatility. The evidence is robust to a number of sensitivity tests.

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KW - Growth volatility

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The link between economic growth and growth volatility

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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