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Growth and Output Fluctuations


  • Chol-Won Li


Output fluctuations are driven by expectations about the degree of competition in the product market (and R&D sector). We examine how the characteristics of endogenous cycles change in the long run, as labour productivity grows faster. Main results: (i) expansion (or contraction) occurs more (or less) frequently, (ii) expansion becomes milder but contraction severer, (iii) the amplitude of fluctuations becomes larger, (iv) the variance of output changes ambiguously, indicating a non-linear relation. Once the growth of labour productivity is endogenised with learning-by- doing, it grows faster in contraction if the strength of inter-industry learning spillovers is relatively weak.

Suggested Citation

  • Chol-Won Li, 1998. "Growth and Output Fluctuations," Working Papers 9810, Business School - Economics, University of Glasgow.
  • Handle: RePEc:gla:glaewp:9810

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    References listed on IDEAS

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    Cited by:

    1. Patricia Crifo & Etienne Lehmann, 2001. "Why the Kuznets Curve Will Always Reverse," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00150324, HAL.
    2. Patricia Crifo-Tillet & Etienne Lehmann, 2004. "Why Will Technical Change Not Be Permanently Skill-Biased?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 157-180, January.

    More about this item


    expectations; fluctuations; growth; learning-by-doing; innovations;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General


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