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Growth Dynamics

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  • Sweta Chaman Saxena
  • Valerie Cerra

Abstract

Using panel data for a large number of countries, we find that economic contractions are not followed by offsetting fast recoveries. Trend output lost is not regained, on average. Wars, crises, and other negative shocks lead to absolute divergence and lower long-run growth, whereas we find absolute convergence in expansions. The output costs of political and financial crises are permanent on average and long-term growth is negatively linked to volatility. These results also imply that panel data studies can help identify the sources of growth and that economic models should be capable of explaining growth and fluctuations within the same framework.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/147.

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Length: 43
Date of creation: 01 Jul 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/147

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Related research

Keywords: Economic growth; Economic recovery; Production; recession; recessions; growth rate; growth rates; financial crises; business cycles; currency crisis; banking crisis; banking crises; currency crises; growth model; business cycle; financial liberalization; gdp per capita; financial crisis; national income; competitiveness; asian crisis; borderline financial crises; balance of payments crisis; growth theories; gdp growth; real gdp; banking supervision; crisis countries; effect of recession; severe recessions; capital account liberalization; crisis episode; pre-crisis; gdp growth rates; payments crisis;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Another case for plan B
    by chris dillow in Stumbling and Mumbling on 2011-07-27 13:31:10
  2. Recession & work ethics
    by chris dillow in Stumbling and Mumbling on 2013-06-18 13:27:00
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