Growth-cycle nexus

Kodama Masahiro

No 387, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This research sheds light on the negative correlation between economic growth and business cycle in less developed economies. Whereas many previous studies explain the negative correlation from a viewpoint in which business cycle affects economic growth, we attempt to present a hypothesis based on the other influence direction in which economic growth affects business cycle. We investigate the validity of the hypothesis using two methods: econometric analysis and numerical analysis. We find that the econometric analysis supports our hypothesis. The numerical analysis shows that the effect of the proposed hypothesis produces the negative correlation between economic growth and business cycle.

Keywords: Developing countries; Economic growth; Economic development; Business cycles; Growth; Less Developed Economies (search for similar items in EconPapers)
JEL-codes: E32 O40 (search for similar items in EconPapers)
Date: 2013-02-01
New Economics Papers: this item is included in nep-fdg and nep-mac
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 387. 2013-02-01

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