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Total factor productivity and macroeconomic instability


  • Hakan Berument
  • N. Nergiz Dincer
  • Zafer Mustafaoglu


Total factor productivity (TFP) is an important component of growth for most countries. This article assesses the role of macroeconomic instability on TFP growth. We consider volatility in inflation, openness of an economy and financial market deepness as measures of macroeconomic instability. Empirical evidence provided from Turkey suggests that volatility of openness and financial market deepness reduce TFP growth, whereas volatility of inflation increases TFP growth.

Suggested Citation

  • Hakan Berument & N. Nergiz Dincer & Zafer Mustafaoglu, 2011. "Total factor productivity and macroeconomic instability," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(5), pages 605-629, September.
  • Handle: RePEc:taf:jitecd:v:20:y:2011:i:5:p:605-629
    DOI: 10.1080/09638190903365930

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    References listed on IDEAS

    1. Montalbano, Pierluigi & Federici, Alessandro & Triulzi, Umberto & Pietrobelli, Carlo, 2005. "Trade Openness and Vulnerability in Central and Eastern Europe," WIDER Working Paper Series 043, World Institute for Development Economic Research (UNU-WIDER).
    2. Cororaton, Caesar B. & Zingapan, Socorro, 1999. "Recent TFP Policy Agenda for the Philippines," Discussion Papers DP 1999-07, Philippine Institute for Development Studies.
    3. George-Marios Angeletos, 2006. "Uninsured Idiosyncratic Investment Risk: Positive and Normative Implications," 2006 Meeting Papers 596, Society for Economic Dynamics.
    4. Robert M. Townsend & Hyeok Jeong, 2004. "Discovering the Sources of TFP Growth: Occupation Choice, Capital Heterogeneity, and Financial Deepening," Econometric Society 2004 North American Summer Meetings 405, Econometric Society.
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