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Volatility and Growth: A not so straightforward relationship

Listed author(s):
  • Dimitrios Bakas

    ()

    (Nottingham Business School, Nottingham Trent University, UK; The Rimini Centre for Economic Analysis)

  • Georgios Chortareas

    ()

    (School of Management and Business, King's College London, UK; Department of Economics, University of Athens, Greece)

  • Georgios Magkonis

    ()

    (School of Management, University of Bradford, UK)

This paper is motivated by the conflicting theories and empirical evidence regarding the relationship between business cycle volatility and economic growth. The average reported effect of volatility on growth is negative, but the empirical estimates vary substantially across studies. We identify the factors that explain the heterogeneity of the estimates by conducting a meta-analysis. Our evidence suggests that researchers' choices regarding the measure of volatility, the control set of the estimated equation, the estimation methods, and the data characteristics play a significant role in the total outcome. Finally, the literature is found to be free of publication bias.

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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 17-12.

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Date of creation: Jun 2017
Handle: RePEc:rim:rimwps:17-12
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