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Long-run growth and volatility: which source really matters?

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  • Davide Furceri

Abstract

The aim of the article is to analyse the relationship between long-run growth and business cycle volatility. In particular, the main purpose of this article is to identify which source of volatility is most detrimental to growth. Using cross-country data from 1970 to 2000, and several indicators of volatility (such as inflation, exchange rate, government expenditure, output and investment volatility) this article shows that although, all these measures of volatility are remarkably harmful for growth, business cycle investment volatility is the main source that hampers long-run growth. This relation is robust to different measures of business cycle, and to different sub-samples of countries.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 42 (2010)
Issue (Month): 15 ()
Pages: 1865-1874

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Handle: RePEc:taf:applec:v:42:y:2010:i:15:p:1865-1874

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Cited by:
  1. Bisio, Laura & Ventura, Luigi, 2012. "Growth and volatility reconsidered: reconciling opposite views," MPRA Paper 35937, University Library of Munich, Germany.
  2. Eleftherios Goulas & Athina Zervoyianni, 2013. "Economic growth and crime: does uncertainty matter?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(5), pages 420-427, March.
  3. Afonso, António & Furceri, Davide, 2008. "Government size, composition, volatility and economic growth," Working Paper Series 0849, European Central Bank.
  4. António Afonso & Luca Agnello & Davide Furceri, 2010. "Fiscal policy responsiveness, persistence, and discretion," Public Choice, Springer, vol. 145(3), pages 503-530, December.
  5. Eller, Markus & Fidrmuc, Jarko & Fungácová , Zuzana, 2013. "Fiscal policy and regional output volatility: Evidence from Russia," BOFIT Discussion Papers 13/2013, Bank of Finland, Institute for Economies in Transition.
  6. Arratibel, Olga & Furceri, Davide & Martin, Reiner, 2008. "Real convergence in Central and Eastern European EU Member States: which role for exchange rate volatility?," Working Paper Series 0929, European Central Bank.
  7. Annabelle Mourougane & Davide Furceri, 2010. "Une lecture de la crise à la lumière des crises passées," Économie et Statistique, Programme National Persée, vol. 438(1), pages 19-42.
  8. repec:apl:wpaper:14-08 is not listed on IDEAS
  9. Eleftherios Goulas & Athina Zervoyianni, 2013. "Growth, Deficits and Uncertainty: Theoretical Aspects and Empirical Evidence," Working Paper Series 53_13, The Rimini Centre for Economic Analysis.
  10. Davide Furceri & Ernesto Crivelli & Joël Toujas-Bernate, 2012. "Can Policies Affect Employment Intensity of Growth? A Cross-Country Analysis," IMF Working Papers 12/218, International Monetary Fund.
  11. Goulas, Eleftherios & Zervoyianni, Athina, 2013. "Growth, deficits and uncertainty: Theoretical aspects and empirical evidence from a panel of 27 countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 380-392.
  12. Michael Jetter, 2013. "Volatility and Growth: An Explanation for the Disagreement," DOCUMENTOS DE TRABAJO CIEF 010944, UNIVERSIDAD EAFIT.

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