Risk, Volatility, and the Global Cross-Section of Growth Rates
AbstractWe reconsider the empirical links between volatility and growth between 1970 and 2007. There is a strong and significant correlation between individual country growth rates and global factors that are arguably exogenous with respect to their economies. The amount of volatility driven by these external factors is highly correlated, cross-sectionally, with the overall amount of volatility in GDP growth. There is also a strong correlation between a country's average growth rate and the magnitude and sign of its exposure to global factors. We interpret our findings as a partial answer to the question "Why doesn't capital flow from rich to poor countries?" We argue that low-income countries that grow slowly are riskier from the perspective of the marginal international investor.
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 10-42.
Date of creation: 2010
Date of revision:
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Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
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Volatility; Growt; Growth Rate; Capital Flow; Low-Income Countries; Growth Discrepancies;
Other versions of this item:
- Craig Burnside & Alexandra Tabova, 2009. "Risk, Volatility, and the Global Cross-Section of Growth Rates," NBER Working Papers 15225, National Bureau of Economic Research, Inc.
- Alexandra Tabova & Craig Burnside, 2010. "Risk, Volatility, and the Global Cross-Section of Growth Rates," 2010 Meeting Papers 1121, Society for Economic Dynamics.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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