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Growth and Volatility

  • Jean Imbs

    (Universtity of Geneva)

Growth and volatility correlate negatively across countries, but positively across sectors. Analytically, whether or not sectoral growth and volatility are correlated positively is irrelevant in the aggregate. Cross-country estimates identify the detrimental e¤ects of macroeconomic volatility on growth, but they cannot be used to dismiss theories implying a positive growth-volatility coefficient, which appear to hold in sectoral data. In particular, volatile sectors command high investment rates, as they would in a mean-variance framework.

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Paper provided by Swiss Finance Institute in its series Swiss Finance Institute Research Paper Series with number 06-09.

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Length: 23 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:chf:rpseri:rp0609
Contact details of provider: Web page: http://www.SwissFinanceInstitute.ch

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  18. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-86, June.
  19. Andrew B Bernard & J Bradford Jensen, 2001. "Who Dies? International Trade, Market Structure, and Industrial Restructuring," Working Papers 01-04, Center for Economic Studies, U.S. Census Bureau.
  20. Aart Kraay & Jaume Ventura, 2007. "Comparative Advantage and the Cross-section of Business Cycles," Journal of the European Economic Association, MIT Press, vol. 5(6), pages 1300-1333, December.
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