Uncertainty and growth: evidence of emerging and developed countries

Angelo Salton and Regis Ely

Economics Bulletin, 2017, vol. 37, issue 2, 1274-1280

Abstract: This letter aims to investigate the relationship between uncertainty and economic growth in economies with different stages of development. We use monthly data on industrial production during the period of 1961 to 2014 from OECD's Main Economic Indicators database. We estimate the relationship between industrial production growth and its volatility from 14 countries using EGARCH in mean and panel GARCH in mean models. Our results suggest that the correlation between economic growth and its own volatility is positive in developed countries but ambiguous in emerging economies. This facts support both theories of precautionary savings, in the case of developed countries, and irreversible investments, in the case of some emerging economies.

Keywords: Uncertainty; economic growth; volatility; development (search for similar items in EconPapers)
JEL-codes: E3 O1 (search for similar items in EconPapers)
Date: 2017-06-05
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Citations: View citations in EconPapers (2)

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