Volatility and growth: Governments are key

Volatility and Growth: Governments are Key

Volatility and Growth: Governments are Key There exists a persistent disagreement in the literature over the effect of business cycles on economic growth. This paper offers a solution to this disagreement, suggesting that volatility carries a positive direct effect, but also a negative indirect effect, operating through the insurance mechanism of government size. Theoretically, the net growth e...

Economic Freedom, Economic Growth And Governments Tax Revenue In (MENA)

Innation, Volatility and Growth

This paper reexamines the relationship between innation, innation volatility and growth using crosscountry panel data for the past 30 years. With regard to the level of innation, we nd that in contrast to current ndings which are based on cross-sectional time-average regression comparisons, exploiting the time dimension of the data reveals a strong negative correlation between innation and inco...

Volatility, Growth, and Welfare

This paper constructs an endogenous growth model driven by self-ful…lling expectation shocks to explain the stylized fact that the average growth rate of GDP is related negatively to volatility and positively to capacity utilization. The implied welfare gain from further stabilizing the U.S. economy is about a quarter of annual consumption, which is consistent in order of magnitude with estimat...

Volatility, Growth and Aggregation¤

I revisit the relationship between growth and volatility in two di¤erent disaggregated data sets. I con...rm that growth and volatility are negatively related across countries, but show that across sectors, the relation is the opposite. This phenomenon, sometimes called “Simpson’s fallacy”, has a natural interpretation in the present context: it is the component of aggregate volatility that is ...