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Does growth affect volatility? An empirical study on developing countries


  • Masahiro Kodama


Whereas economic growth and business cycles have received significant attention in the literature, they are typically examined separately. However, recent studies have found a causality in which short-term output volatility affects economic growth (volatility-growth causality). In contrast, in this study, we examine whether the opposite causality, from economic growth to short-term output volatility (growth-volatility causality), exists. The existence of volatility-growth causality does not necessarily exclude the existence of growth-volatility causality, and the two causalities may coexist. We empirically examine growth-volatility causality, and the results of our econometric analyses confirm its existence.

Suggested Citation

  • Masahiro Kodama, 2014. "Does growth affect volatility? An empirical study on developing countries," Applied Economics Letters, Taylor & Francis Journals, vol. 21(4), pages 257-260, March.
  • Handle: RePEc:taf:apeclt:v:21:y:2014:i:4:p:257-260 DOI: 10.1080/13504851.2013.854291

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    References listed on IDEAS

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    Cited by:

    1. Antonakakis, N. & Badinger, H., 2016. "Economic growth, volatility, and cross-country spillovers: New evidence for the G7 countries," Economic Modelling, Elsevier, vol. 52(PB), pages 352-365.

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