On the Determinants of Growth Volatility: a Nonparametric Approach
We propose a model where the growth rate volatility of a country is explained by structural change and the size of the economy. We test these predictions by means of nonparametric techniques. Growth volatility appears to (i) decrease with total GDP, (ii) increase with the share of the agricultural sector on GDP. Trade openness can also play a role in conjunction with total GDP. In accordance with our model, the explanatory power of per capita GDP, a relevant variable in other empirical works, vanishes when we control for these variables.
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