Are economic growth and the variability of the business cycle related ? Evidence from five European countries

Stilianos Fountas and Menelaos Karanasos ()
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Menelaos Karanasos: Department of Economics and Finance, Brunel University

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: We use a long series of annual data that span over 100 years to examine the relationship between output growth and its uncertainty in five European countries. Using the GARCH methodology to proxy uncertainty, we obtain two important results. First, more uncertainty about output leads to a higher rate of growth in three of the five countries. Second, output growth reduces its uncertainty in all countries except one. Our results are robust to alternative specifications and provide strong support to the recent emphasis by macroeconomists on the joint examination of economic growth and the variability of the business cycle.

Keywords: Output growth; output growth uncertainty; GARCH. (search for similar items in EconPapers)
JEL-codes: C22 E32 (search for similar items in EconPapers)
Date: 2008-12, Revised 2008-12
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Are economic growth and the variability of the business cycle related? Evidence from five European countries (2008)
Working Paper: Are Economic Growth and the Variability of the Business Cycle Related? Evidence from Five European Countries (2002)
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