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Have output growth rates stabilised? evidence from the g‐7 economies

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  • Terence C. Mills
  • Ping Wang

Abstract

In this paper we consider an extension of Hamilton's Markov chain model of output growth that allows for a one‐time structural break in the hyperparameters. We fit this model to post‐war quarterly output growth data from the G‐7 economies and find evidence for such a structural break in each of them, although the break occurs at different times. The break is always associated with a decline in volatility and often with a narrowing of the mean growth differential between the expansionary and recessionary regimes. The results show that stabilisation has typically been achieved at the expense of a reduction in growth rates.

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  • Terence C. Mills & Ping Wang, 2003. "Have output growth rates stabilised? evidence from the g‐7 economies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(3), pages 232-246, August.
    • Handle: RePEc:bla:scotjp:v:50:y:2003:i:3:p:232-246
    DOI: 10.1111/1467-9485.5003008
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    References listed on IDEAS

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