Discussion of Assessing the Sources of Changes in the Volatility of Real Growth

This is a particularly interesting paper in that it attempts to extend the recent analysis of observed declines in output volatility in a number of individual countries to a more generalised framework. There is, as always, more work to do before the question of whether changes in output growth volatility can be viewed as due to global or country-specifi c changes. I want to structure my remarks around two broad points. The fi rst is to go over some of the existing ground on whether the fall in volatility is due to either real changes in the economy, or to the effects of smaller shocks (or luck, as it is sometimes denoted in the literature). Much of this ground is already covered in Stock and Watson (2002). The second point relates to the attempt to analyse this question in a multi-country framework, as opposed to the usual unilateral approach that is evident in the previous literature and is generally based around the US experience. Finally, I make some concluding remarks and suggestions for future directions with this line of research.