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Macroeconomic Stability and the Distribution of Growth Rates

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  • Vatcharin Sirimaneetham
  • Jonathan R.W. Temple

Abstract

It is often argued that macroeconomic instability can form a binding constraint on economic growth. Drawing on a new index of stability, threshold estimation is used to divide developing economies into two growth regimes, depending on a threshold level of stability. For the more stable group of countries, the output benefits of investment are greater, conditional convergence is faster, and measures of institutional quality have more explanatory power, suggesting that instability forms a binding constraint for the less stable group. Macroeconomic stability is also shown to dominate several other candidates for identifying distinct growth regimes. Copyright The Author 2009. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Vatcharin Sirimaneetham & Jonathan R.W. Temple, 2009. "Macroeconomic Stability and the Distribution of Growth Rates," World Bank Economic Review, World Bank Group, vol. 23(3), pages 443-479, September.
  • Handle: RePEc:oup:wbecrv:v:23:y:2009:i:3:p:443-479
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    File URL: http://hdl.handle.net/10.1093/wber/lhp008
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    Cited by:

    1. Rockey, James & Temple, Jonathan, 2016. "Growth econometrics for agnostics and true believers," European Economic Review, Elsevier, pages 86-102.
    2. Günther Rehme, 2011. "Endogenous Policy And Cross‐Country Growth Empirics," Scottish Journal of Political Economy, Scottish Economic Society, pages 262-296.
    3. Kerekes, Monika, 2012. "Growth miracles and failures in a Markov switching classification model of growth," Journal of Development Economics, Elsevier, pages 167-177.
    4. Vusal Musayev, 2016. "Externalities in Military Spending and Growth: The Role of Natural Resources as a Channel through Conflict," Defence and Peace Economics, Taylor & Francis Journals, pages 378-391.
    5. Rodríguez, Francisco & Shelton, Cameron A., 2013. "Cleaning up the kitchen sink: Specification tests and average derivative estimators for growth econometrics," Journal of Macroeconomics, Elsevier, pages 260-273.
    6. Musayev, Vusal, 2014. "Commodity Price Shocks, Conflict and Growth: The Role of Institutional Quality and Political Violence," MPRA Paper 59786, University Library of Munich, Germany.
    7. Manoel Bittencourt & Renee van Eyden & Monaheng Seleteng, 2013. "Inflation and Economic Growth in the SADC: Some Panel Time-Series Evidence," Working Papers 201354, University of Pretoria, Department of Economics.
    8. Bittencourt, Manoel, 2012. "Financial development and economic growth in Latin America: Is Schumpeter right?," Journal of Policy Modeling, Elsevier, pages 341-355.
    9. Ann Owen & Julio Videras & Lewis Davis, 2009. "Do all countries follow the same growth process?," Journal of Economic Growth, Springer, vol. 14(4), pages 265-286, December.
    10. Bittencourt, Manoel, 2012. "Financial development and economic growth in Latin America: Is Schumpeter right?," Journal of Policy Modeling, Elsevier, pages 341-355.
    11. Deng, Wen-Shuenn & Lin, Yi-Chen & Gong, Jinguo, 2012. "A smooth coefficient quantile regression approach to the social capital–economic growth nexus," Economic Modelling, Elsevier, vol. 29(2), pages 185-197.
    12. Bittencourt, Manoel, 2012. "Inflation and economic growth in Latin America: Some panel time-series evidence," Economic Modelling, Elsevier, vol. 29(2), pages 333-340.
    13. Bittencourt, Manoel, 2012. "Inflación y crecimiento económico: Evidencia con datos de panel para América del Sur," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 23, pages 25-38.
    14. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, Elsevier.
    15. Saima Nawaz & Nasir Iqbal & Muhammad Arshad Khan, 2014. "The Impact of Institutional Quality on Economic Growth: Panel Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, pages 15-31.

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