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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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  19. Maurice Obstfeld., 1993. "Risk-Taking, Global Diversification, and Growth," Center for International and Development Economics Research (CIDER) Working Papers C93-016, University of California at Berkeley.
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