Business Cycle Variability and Growth Linkage

John Inekwe

No 38-14, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This study contributes in bridging the dichotomy between economic growth and business cycle paradigms by providing dynamic characterisation of the link between economic growth, risk aversion, uncertainty and variability in industrial production, consumption and investment. In a system of equations, the study reveals that risk aversion, uncertainty and variability of business cycle components aid to contract growth. In contrast, ambiguous relationship exists between variability of hours worked and economic growth. Uncertainty and risk aversion induce increment in variability of business cycle components. Across countries, economic growth remains sensitive to the level of risk aversion and uncertainty

Keywords: Growth; Volatility; Business; Cycle; Uncertainty; Risk Aversion (search for similar items in EconPapers)
JEL-codes: E20 E44 G1 O40 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2014-09
New Economics Papers: this item is included in nep-gro and nep-mac
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